does non profit=tax deduction???

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does non profit=tax deduction???

Postby burningtoknow » Tue Nov 22, 2011 8:48 am

Can anyone answer this question for me. This would take some of the sting out of the price increase and also lower the cost for us who file taxes. There does not seem to be much info about this new non profit Burningman.
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Re: does non profit=tax deduction???

Postby Dr. Pyro » Tue Nov 22, 2011 8:52 am

I write off my ticket price because I have done, and continue to do, business with burners and have formed many mutally beneficial business relationships with burners. But that still might make the deductability of your ticket questionable. But as my accountant has always said: "The greatest deduction in the world is a fertile imagination."
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Re: does non profit=tax deduction???

Postby Mitch » Tue Nov 22, 2011 9:07 am

I think the general rule is that if you get something of value from a not-for-profit entity, then you CAN'T deduct that. So the per capita cost of providing Burning Man plus the jaw-breaker wouldn't be deductible, but anything above that would be.

Interesting corallary if I'm right: The higher-tier tickets, which subsidize the lower-tier ones, would then be eligible for a deduction that increases with the price, so that those who can "afford" to pay more then get a break they can use. (Logically, then, those BEING subsidized would have a tax liability....)
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Re: does non profit=tax deduction???

Postby Mitch » Tue Nov 22, 2011 9:09 am

I think the general rule is that if you get something of value from a not-for-profit entity, then you CAN'T deduct that. So the per capita cost of providing Burning Man plus the jaw-breaker wouldn't be deductible, but anything above that would be.

Interesting corallary if I'm right: The higher-tier tickets, which subsidize the lower-tier ones, would then be eligible for a deduction that increases with the price, so that those who can "afford" to pay more then get a break they can use. (Logically, then, those BEING subsidized would have a tax liability....)
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Re: does non profit=tax deduction???

Postby remi » Tue Nov 22, 2011 9:09 am

Dr. Pyro wrote:I write off my ticket price because I have done, and continue to do, business with burners and have formed many mutally beneficial business relationships with burners. But that still might make the deductability of your ticket questionable. But as my accountant has always said: "The greatest deduction in the world is a fertile imagination."


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Re: does non profit=tax deduction???

Postby ConnieH » Tue Nov 22, 2011 9:17 am

It's not a donation, you are getting an entry ticket in exchange for your money, so it's not a deductible contribution to a non-profit.

Now for business owners like Dr. Pyro, he can write it off as a business expense, just like he can write off travel expenses getting to a business conference, items purchased to run his business, etc., so long as he can prove he did business at the event, or made a business contact. But writing off business expenses isn't as lucrative or beneficial as it seems, you need to spend the money first in order to get the write-off, and write-offs reduce your bottom line, which can hurt you when you go to the bank and ask them for a loan.
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Re: does non profit=tax deduction???

Postby trilobyte » Tue Nov 22, 2011 9:17 am

The Burning Man Project (the non-profit) is still in the early stages, and has no involvement in the Burning Man event. The event is owned and organized by the BMOrg, a limited liability corporation.
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Re: does non profit=tax deduction???

Postby Mitch » Tue Nov 22, 2011 10:49 am

ConnieH wrote:It's not a donation, you are getting an entry ticket in exchange for your money, so it's not a deductible contribution to a non-profit.


Once it goes not-for-profit, they could arrange it to be a contribution. For $400, you get an entry to Burning Man and a t-shirt, and the extra $XX is deductible.
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Re: does non profit=tax deduction???

Postby pink » Tue Nov 22, 2011 11:22 am

ConnieH wrote:It's not a donation, you are getting an entry ticket in exchange for your money, so it's not a deductible contribution to a non-profit.

Now for business owners like Dr. Pyro, he can write it off as a business expense, just like he can write off travel expenses getting to a business conference, items purchased to run his business, etc., so long as he can prove he did business at the event, or made a business contact. But writing off business expenses isn't as lucrative or beneficial as it seems, you need to spend the money first in order to get the write-off, and write-offs reduce your bottom line, which can hurt you when you go to the bank and ask them for a loan.

There's more to a legit biz deduction than simply making a business contact. For travel, the main purpose of the trip must be business, and business must be conducted each day for that day to be deductible. Since commerce is not allowed at the burn, any astute (or burner) auditor could disallow the expense in a heartbeat.

Now as for a charitable contribution, since a portion of the tickets goes for art grants, hypothetically that portion could be deducted. Then there is the loophole for churches, where on their donation letter, it states "nothing but intangible religious benefits was received in return for this contribution". I'm not sure if only 'churches' get to use that one. But I could make the argument that it is a spiritual experience for me!

It's a moot point until 2013, so I have that long to ponder this one.

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Re: does non profit=tax deduction???

Postby bradtem » Tue Nov 22, 2011 11:49 am

Once it is a non-profit (this is some years away) they could calculate an actual cost per ticket of putting on the event, and publish that number, and you could deduct your ticket price above that number as a donation. This would only work if you had an upper tier ticket -- they have routinely said the lower tier tickets are money losers.

Don't expect a very large deduction. $10s of dollars probably --- not enough to really effect your decision of whether to go. Possibly enough to mildly affect a decision to buy a pre-sale high price ticket.

A more interesting question would concern real cash expenses for people bringing art to the playa. And the rule that says if you travel to volunteer for a non-profit you can deduct 14 cents/mile for your car expenses. Problem is I think the IRS will look hard at whether you are really donating to or volunteering for a non-profit here, or just going on vacation.
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Re: does non profit=tax deduction???

Postby dragonpilot » Tue Nov 22, 2011 5:03 pm

pink wrote:
ConnieH wrote:It's not a donation, you are getting an entry ticket in exchange for your money, so it's not a deductible contribution to a non-profit.

Now for business owners like Dr. Pyro, he can write it off as a business expense, just like he can write off travel expenses getting to a business conference, items purchased to run his business, etc., so long as he can prove he did business at the event, or made a business contact. But writing off business expenses isn't as lucrative or beneficial as it seems, you need to spend the money first in order to get the write-off, and write-offs reduce your bottom line, which can hurt you when you go to the bank and ask them for a loan.

There's more to a legit biz deduction than simply making a business contact. For travel, the main purpose of the trip must be business, and business must be conducted each day for that day to be deductible. Since commerce is not allowed at the burn, any astute (or burner) auditor could disallow the expense in a heartbeat.

Now as for a charitable contribution, since a portion of the tickets goes for art grants, hypothetically that portion could be deducted. Then there is the loophole for churches, where on their donation letter, it states "nothing but intangible religious benefits was received in return for this contribution". I'm not sure if only 'churches' get to use that one. But I could make the argument that it is a spiritual experience for me!

It's a moot point until 2013, so I have that long to ponder this one.

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Yep...these guys pretty much are on the money. I'm an Enrolled Agent (certificated to represent taxpayers during audits), and when I get questions like this I tell my clients...hell, you can deduct whatever the hell you want...it's just possible, however, that the IRS may disagree with you. If it's border line go for it, but put away money to pay penalties and interest just in case you lose an audit. If it's questionable, stay away from it...the money you may be saving in taxes, especially on this issue, is just not worth the hassle, time, and expense if you win the IRS audit lottery...which is only about 1.5% of all taxpayers per year...but still...

Your choice is to deduct it as a charitable contribution or as business expense. As a charity you may be able to justify anything below the cost of a ticket that goes directly to event production, because that's what your getting in return...essentially, entertainment. Take Girl Scout Cookies...say a box of Samoas costs you $8...you can only deduct maybe about $4 of the cookie production because you're getting $4 worth of cookies...something in return for your $8. None of the things you bring to the playa is deductible because generally those are things for YOUR personal use...think you can justify writing off the rental of a luxury motorhome while some other poor schmuck tries to write off six bucks he paid for a pup tent...go ahead.

As for a business write off, in the IRS's view the intent of business is to generate income (ahem...that's how the IRS makes its money). Last time I looked, there are no commodity transactions on the playa. There are, however, many camps onplaya that DO pre-charge for getting there, providing meals/shelter/bathing, etc...to those I say more power to ya...I'll be happy to sign your tax return. But if you're just looking to avoid a tax by claiming expenses as a business deduction on Schedule C if you're a sole proprietor, Form 1065 if you're a partnership, or Form 1040S if you're incorporated they'll cut ya a little slack, but if you go year to year without producing income you'll be declared a hobby, pay back taxes and sweeten the pot with penalties and interest...oh, and I wouldn't be a-signin' that tax return...no sirree...
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Re: does non profit=tax deduction???

Postby pink » Wed Nov 23, 2011 2:15 am

dragonpilot wrote:
pink wrote:There's more to a legit biz deduction than simply making a business contact. For travel, the main purpose of the trip must be business, and business must be conducted each day for that day to be deductible. Since commerce is not allowed at the burn, any astute (or burner) auditor could disallow the expense in a heartbeat.

Now as for a charitable contribution, since a portion of the tickets goes for art grants, hypothetically that portion could be deducted. Then there is the loophole for churches, where on their donation letter, it states "nothing but intangible religious benefits was received in return for this contribution". I'm not sure if only 'churches' get to use that one. But I could make the argument that it is a spiritual experience for me!

It's a moot point until 2013, so I have that long to ponder this one.

Pink, CPA


Yep...these guys pretty much are on the money. I'm an Enrolled Agent (certificated to represent taxpayers during audits),
and when I get questions like this I tell my clients...hell, you can deduct whatever the hell you want...it's just possible,however, that the IRS may disagree with you. If it's border line go for it, but put away money to pay penalties
and interest just in case you lose an audit. If it's questionable, stay away from it...the money you may be saving in taxes,
especially on this issue, is just not worth the hassle, time, and expense if you win the IRS audit lottery...which is only
about 1.5% of all taxpayers per year...but still...

I'm right with you on this. I just didn't want to go into that much detail..I've done a lot of representation work and wouldn't want to try to justify the biz deduction. There's a saying about hogs getting slaughtered... And the code is pretty damn clear on biz travel.

Your choice is to deduct it as a charitable contribution or as business expense. As a charity you may be able to justify anything below the cost of a ticket that goes directly to event production, because that's what your getting in return...essentially, entertainment. Take Girl Scout Cookies...say a box of Samoas costs you $8...you can only deduct maybe about $4 of the cookie production because you're getting $4 worth of cookies...something in return for your $8. None of the things you bring to the playa is deductible because generally those are things for YOUR personal use...think you can justify writing off the rental of a luxury motorhome while some other poor schmuck tries to write off six bucks he paid for a pup tent...go ahead.

As for a business write off, in the IRS's view the intent of business is to generate income (ahem...that's how the IRS makes its money). Last time I looked, there are no commodity transactions on the playa. There are, however, many camps onplaya that DO pre-charge for getting there, providing meals/shelter/bathing, etc...to those I say more power to ya...I'll be happy to sign your tax return. But if you're just looking to avoid a tax by claiming expenses as a business deduction on Schedule C if you're a sole proprietor, Form 1065 if you're a partnership, or Form 1040S if you're incorporated they'll cut ya a little slack, but if you go year to year without producing income you'll be declared a hobby, pay back taxes and sweeten the pot with penalties and interest...oh, and I wouldn't be a-signin' that tax return...no sirree...
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Re: does non profit=tax deduction???

Postby Igneouss » Thu Nov 24, 2011 4:55 am

Burning Man is NOT a non-profit. The Org has stated it's intent to become a non-profit at some point in the future. But not yet. For now there are 6 people sitting on a mountain of our cash with no outside observers. I hope you trust them.
Basic b/e analysis:
2005 $243K
06 $855K
07 $1.0M
08 $1.1M
09 $0
10 $1.1M
11 $1.2M
12 $1.2M
That’s $6.8M that thousands of volunteers deserve to know about. Capitalism is alive at BM. Tickets are the commodity. Others have estimated higher profits.
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Re: does non profit=tax deduction???

Postby BBadger » Thu Nov 24, 2011 7:04 am

Do you also "write off" the expense of buying cookies from Girl Scouts?

I like Dr. Pyro's idea though: make it a business expense. It can be a "conference" or maybe the expense of hauling your "office" out to the playa for doing business. Or maybe it's for R&D: you're prototyping products for camping, or doing demographic research. I'm not sure how the IRS will react seeing "Burning Man Ticket" as an expense worthy of write-off though.
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Re: does non profit=tax deduction???

Postby theCryptofishist » Thu Nov 24, 2011 9:06 am

Igneouss wrote:Burning Man is NOT a non-profit. The Org has stated it's intent to become a non-profit at some point in the future. But not yet. For now there are 6 people sitting on a mountain of our cash with no outside observers. I hope you trust them.

A mountain of cash may pass through their hands, but that's a different matter than their "sitting on it".
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Re: does non profit=tax deduction???

Postby Igneouss » Thu Nov 24, 2011 9:32 am

They have hinted or said outright that BM has made more then it spent for several years. And before anyone points to the online reports, even basic accounting pricipals will tell you that the on line reports do not provide near enough info to ascertain how much money has been made. There is also the problem that as an LLC they are under no legal obligation to tell any of us anything.

This is the reason I have so strongly advocated the public disclosure that comes with non-profit status.

I love BM. But I am always suspicious of people that claim to do good with money that lacks public accounting.

Even as an LLC they could easily publish audited statements. No law says they can't. But they don't. Why is that? Particularly for a huge organization that is built on the backs of countless volunteers?

The reports published on the web site are way way to vague to demonstrate any sort of fiduciary responsibility.

Another problem is when they do go non-profit (in a few years?) there will be no backwards accounting. I suspect we will never know what happend between the year they started 'making a profit' and the year they turn non-profit. This is troubling.
Basic b/e analysis:
2005 $243K
06 $855K
07 $1.0M
08 $1.1M
09 $0
10 $1.1M
11 $1.2M
12 $1.2M
That’s $6.8M that thousands of volunteers deserve to know about. Capitalism is alive at BM. Tickets are the commodity. Others have estimated higher profits.
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Re: does non profit=tax deduction???

Postby Sassy Britches » Thu Nov 24, 2011 11:56 am

Doesn't this all come back to choice? We have the choice to decide whether or not the ticket price is good enough value to pay it and go or not go. For me, I have received fantastic value for the price I paid for the ticket and that's why I am going back and am willing to pay at whatever price tier I decide is the max price I will pay. I don't need BMORG to show me it's books in any detail to make this simple decision. If they decide to raise prices again next year, I will have the same decision to make, as will the rest of us. To be honest, the last thing I want is for BMORG to have to start paying for any overhead required to deal with publicly accounting for every detail. That in itself would add costs (that would need to be recovered in ticket prices) that don't being any value whatsoever - wouldn't add to the experience of the playa one bit.
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Re: does non profit=tax deduction???

Postby Eric » Thu Nov 24, 2011 1:30 pm

Igneouss wrote:Even as an LLC they could easily publish audited statements. No law says they can't. But they don't. Why is that? Particularly for a huge organization that is built on the backs of countless volunteers?


I've worked for LLC's before- the Bmorg gives more financial info to the general public than any I've seen. Doesn't mean there aren't LLC's giving more info out, I just haven't seen them.

I also spent years mocking those people who would volunteer for a "for profit" company, now I'm one of those volunteers. What changed? Apparently I saw somewhere that I could actual help fix some problems (the flood of spam here) and help keep a community I love vibrant and growing. People choose to volunteer- it's not like we're stupid & don't know that the Board & some regular employees are making living wages off of it (I would if I could), it's that we like this little party & want to help it along.

We all think that we're personally owed an explanation for everything they do- guess what, we're not. They're a business. Granted, if every last person decided not to show up the event would end, but that's about as likely to happen as the world is to end next December.

As I've always said- if you don't like the way they do business, don't do business with them. Vote with your dollars.
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Re: does non profit=tax deduction???

Postby mdmf007 » Thu Nov 24, 2011 9:57 pm

Igneouss wrote:Burning Man is NOT a non-profit. The Org has stated it's intent to become a non-profit at some point in the future. But not yet. For now there are 6 people sitting on a mountain of our cash with no outside observers. I hope you trust them.



The BMORG is a private company that puts on a private event, no claims of being altruistic or that profits go to starving homeless orphans in the Congo. The sell you a ticket to a festival and what they do with the funds is their business. There are 6 partners and that's how they roll. Your entitled to know their registered agent, location to serve the registered agent and the list of officers filed annually. Other than that its a private affair what goes on behind the curtains.

Going non-profit does open books up to scrutiny though their their annual financial statement.

IMO i go to a U2 concert for a good time. I go to a Seahawks game knowing they will most likely blow it in the second half. I go to BM 14 years now because I love it, but know BM owes me nothing. I volunteer there as much or as little as I want every year as well, expecting nothing.
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