laura888
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Mon Dec-27-04 10:36 AM
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Question about setting up a charity: 501 (c)(3) status |
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I have a friend who was recently diagnosed with a brain tumor. Unfortunately, he has no health insurance, and his bills are mounting fast.
Someone suggested setting up a fund with a designation of 501(c)(3) so that donators are tax-exempt.
Does anyone know anything about this, and what is involved?
thanks for any info!
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mopinko
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Mon Dec-27-04 10:40 AM
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1. someone else will probably have a better answer, but |
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i don't think you can. i'm pretty sure that a 501 cannot benefit a single person. there are a few things that 501's can do. education and advocacy, etc. there may be another way to do it, but 501's must benefit a community of interest.
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GumboYaYa
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Mon Dec-27-04 10:42 AM
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2. Setting up a 501(c) (3) is not that hard if your organization meets |
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Edited on Mon Dec-27-04 10:43 AM by GumboYaYa
all of the qualifications. The process involves a fairly detailed form (I forget the number) and a review period with the IRS.
Unfortunately, a 501(c)(3) may not be established to benefit a single individual. In your case another option is to establish a bank account in the person's name for contributions. Contributors would have to understand that their contributions are not tax deductible. Also, any gifts over $12,000 would be subject to gift tax.
With these types of arrangements, some people are reluctant to donate unless it is in the name of a trust established for the sole purpose of paying health and medical costs.
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sui generis
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Mon Dec-27-04 10:45 AM
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it's his receipt of goods or services that are equivalent to income can in some cases require that he pay income tax on it.
You really don't need to do anything other than set up a special bank account with the bank to accept charitable donations. Just don't spend any money on yourself, i.e., don't pay yourself to "administer" the fund or you'll get in trouble.
If you plan to invest the money or take administrative pay, then you must set up a 501c3. Check your state's official website for more information specific to where you live.
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DU
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Sun May 26th 2024, 09:19 PM
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