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 Post subject: Re: Museums with railroad side businesses
PostPosted: Wed Dec 04, 2013 3:17 pm 

Joined: Thu Nov 22, 2007 5:46 am
Posts: 2564
Location: S.F. Bay Area
Indiana Railway Museum (French Lick) owns its railroad and has a freight subsidiary, the Dubois County Railroad.

My vague recollection is that Coopersville & Marne is owned by a for-profit company, but the railroad is sublet to a non-profit organization which runs the museum and tourist line there, and this nonprofit is controlled by the same people.

Toledo Lake Erie & Western did something in the past few years with a freight company which has a more distant "arms length" relationship. They seek customers... but so far, their business has been limited to car storage.

FRA-wise, most railway museums enjoy "FRA Lite" regulatory treatment, aka Not Insular But Not In the General System. Any freight operation creates the risk of moving you into full-boat FRA. For a typical railroad museum, that does little to improve safety, while increasing tedious paperwork and forced inspections and unnecessary work to the point where you will probably need not just a budget, but a full time staff too.

I'm trying to figure out whether TLE&W's car storage (alone) allows them to stay in FRA-Lite or whether it hales their entire heritage operation into the general system.

There are various state law impacts.

There is also the tax question of "Unrelated Business Income". I suspect that a museum hauling occasional freight could make a show of it and incorporate heritage methods to the greatest extent feasible, for the edutainment of the public, e.g. photo opportunities, or interaction with passengers, mixed freight and the like. That certainly has the potential to put the "related" into the "business income" and I would go for that. I'd work rather hard to avoid UBI because both the tax and the paperwork are considerable.


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