You are getting into some accounting issues that probably beyond the scope of our volunteer suggestions. I'd recommend consulting a professional.
P.S. I thought the part of the question we were discussing was donation of capital assets, not "money" per se. But regardless, I think you need true accounting expertise to bridge the gap between the non-profit and for-profit.
Note - you may be able to find someone to donate the time. Or a simple consultation shouldn't cost that much (and the school should pay for it, in my opinion).
Then how does the school show that money coming in, if not income? It can't be a gift, nor can it be a loan. I guess if it's a gift, that might mean the non profit would have to explain why they gifted money to a for profit business. See it gets kind of hairy.
Yep, I'm the school's bookkeeper and the PTO's bookkeeper, and that's why I wonder about my own liability. I feel I need to guide them correctly and I'm not sure I am.
I appreciate everyones imput though.
The school should have an accountant that could answer that type of question. But I'm trying to imagine how/when they would pay taxes.
Sales tax - if you cirumvent sales tax by the PTO buying it and then giving the item to the school - that does seem like shady thing. I'd check with my state authority on how that should be handled. I suspect the purchase isn't eligble for sales tax exemption when purchased by the PTO.
IRS Tax issues - It's not income, so I don't think it would be counted there. When they dispose of the asset, I suppose Capital Gains could come into the picture.
Hopefully, someone else can weigh in. But I'm really thinking this is mostly a question for the school's accountant. (Or did you mean you are the school's book keeper and they don't have an accountant?)
I think the gift part is a problem because this is a for profit school. I know non profits can gift to each other much easier, but as best I can tell, for the PTO to give the gift, the school has to pay tax on it. Does that sound right?
JHB;147487 wrote: Yes, it is not unusual for a PTO to buy and donate assets to the school. Generally, it should be a true gift. While the PTO may have expectations of how the item will be used, the school becomes the full owner - responsible for the item and all future maintenance.
Based on previous discussions about this topic, I think it's been pretty well split for and against. You can always search the old topics for some of the discussions and views from each side.
