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Are local sports teams that have a federal ID # XXXXX to

Customer Question
file an income tax return?...
Are local sports teams that have a federal ID # XXXXX to file an income tax return?
Submitted: 5 years ago.Category: Tax
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5/2/2012
Tax Professional: Tax.appeal.168, Tax Accountant replied 5 years ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3,856
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Welcome, THANK YOU for using Just Answer. My goal is to help make your life...a little...LESS taxing.

Does any of these teams generate income? Are they corporations? The fact that a person or a business has a Tax I.D. number does not automatically require that they file a tax return. Please provide more information. Thank you.
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Customer reply replied 5 years ago

The team is not incorporated and really does not even have members. If you consider the families as members, they are often changing.

 

For the year ended Dec 31 (our first year) our income was more than our expense by about $3500, but this has since been spent in 2012.

Tax Professional: Tax.appeal.168, Tax Accountant replied 5 years ago
Hello again,

As the team has generated income, then a return should be filed. And since it is not incorporated, and I am assuming not tax exempt, a Schedule C should be filed to show income and expenses.

http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

Please let me know if I can be of further assistance to you regarding this matter.

Thank you again for using JUST ANSWER.
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Customer reply replied 5 years ago

that form is for an individual tax return. whose do I file that under? These are not the funds of any one family on the team

Tax Professional: Tax.appeal.168, Tax Accountant replied 5 years ago
Hello again,

My current thought is that as the team is not incorporated, a corporate return would not be filed, and I understand what you're saying about the income not belonging to any particular family member. I will need to check into this matter a bit further, and get back with you. Thank you for your patience.
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Tax Professional: Tax.appeal.168, Tax Accountant replied 5 years ago
Hello again,

Since there are multiple members, you can file a partnership return, which is a Form 1065. SEE BELOW:

A partnership is an unincorporated business organization that is the result of two or more persons joining together to carry on a trade or business. Each person contributes money, property, services, or a combination thereof, in return for a right to share in the profits and losses of the partnership. An LLC with more than one owner is generally treated as a partnership for tax purposes. A partnership's income and expenses are generally reported on Form 1065 (PDF), U. S. Return of Partnership Income, annually. No income tax is paid by the partnership itself. Each partner receives a Form 1065 Schedule K-1 (PDF), Partner's Share of Income, Deductions, Credits, etc., which indicates the partner's distributive share of partnership income, expenses, and other items, determined in accordance with the terms of the partnership agreement. Partners report on their income tax returns the amounts reported on the Schedule K-1. For more information, refer to Form 1065 Instructions. For more information on partnerships, in general, refer to Publication 541, Partnerships.

REFERENCE SOURCE:

http://www.irs.gov/taxtopics/tc407.html

---------------------------------------------

Link to Form 1065/Instructions:

http://www.irs.gov/pub/irs-pdf/f1065.pdf
http://www.irs.gov/pub/irs-pdf/i1065.pdf

Thank you again for using JUST ANSWER.
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Tax Professional: Tax.appeal.168, Tax Accountant replied 5 years ago
Hello again,

A few days ago I assisted you with a question relating to whether a local sports tram has to file a return. I am following up to see if you require additional clarification regarding this matter. If you do not, and I have fully answered your question, I respectfully XXXXX XXXXX you please click accept, as this is how we receive credit. Thank you in advance.
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Tax Professional: Anne, Master Tax Preparer replied 5 years ago
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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Hi

Thank you for using justanswer. Different expert here.

The answer you received from the above expert is incorrect. You have not created a partnership by putting together a sports team. That would mean that every parent of a player would have to pay tax if there was ever a profit made, nor can they benefit from any loss.

Your team is a "not for profit" organization, which is why you have the Federal
EIN#. That information should be with the information re: your EIN#. Please see below:

FAQs - Kids Non Profits USA-Tax Exempt Applications for Youth ...

at http://www.knpusa.org/3.html

You stated that this was not a Corporation. Please double check with the IRS if you are unsure of what entity you have, since a "Not for Profit" organization must be a Corporate entity.

"Not for Profit" organizations are registered with the IRS, but they have greatly simplified the filing. Unless your orginization made more than $200,000.00, or owns more than $500,000.00, you may file a post card (which the IRS will send you once you call them at(NNN) NNN-NNNN Please see below:


Notice 844 (Rev. 10-2009) Federal Tax Obligations of Non-Profit Corporations

I hope this helps.



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Tax Professional: Tax.appeal.168, Tax Accountant replied 5 years ago
Hello again,

You initially stated the following:

"The team is not incorporated and really does not even have members".

I'm not sure why you were provided with information regarding Notice 844 which is for Non-Profit organizations, when you're not incorporated and you don't have 501c status.

Thank you again for using JUST ANSWER.
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