Railway Preservation News

Should There Be an Emergency Locomotive Fund?
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Author:  Rick Rowlands [ Sat Mar 03, 2018 4:16 pm ]
Post subject:  Re: Should There Be an Emergency Locomotive Fund?

JR May wrote:
Hopefully we'll agree to disagree on the need for a 501c for an ELF effort.


A non profit umbrella shields people from personal liability. It allows for tax deductibility of contributions (agreed not as much of an incentive now), protection from the "key man" dying at the wrong time, the ability to have a liability insurance policy to cover work on site and shipments and several other reasons.

The liability and insurance reasons alone should be enough to want the protection that an umbrella organization would give.

But maybe what your concept of what an ELF would do and mine are different.

Author:  Overmod [ Sun Mar 04, 2018 10:27 pm ]
Post subject:  Re: Should There Be an Emergency Locomotive Fund?

I think the question here is not about a 501(c) that holds funds, but a 501(c) that takes nominal responsibility for the GoFundMe effort and then title to the asset until it 'gets where it's going' for preservation or restoration.

Those are, I think, two very different things. And I don't see any massive legal difficulty in setting up an 'umbrella' organization with a small amount of (donated) expense accounting yearly to keep in business and subsidize the first stages of emergency communication or notification that would be a tool for the use of any group of people taking responsibility for a 'save'.

In the particular case of the 503, I have raised the issue that its potential hazmat content may cause trouble during the course of any move (even one as short as to a piece of panel track on a Port Arthur site) or incur additional TCEQ action that might be expensive. I'd like to think Jason and Nick foresaw this very early and contacted the appropriate people to get at least verbal TCEQ understanding ... but how much better to have some sort of immunity from surprise action.

Author:  superheater [ Sun Mar 04, 2018 11:14 pm ]
Post subject:  Re: Should There Be an Emergency Locomotive Fund?

Rick Rowlands wrote:
A nonprofit structure is absolutely essential in saves such as this, because as it stands now Jason is on the hook for whatever income tax is due for that $67,000. Had there been a nonprofit which could have done the fundraising on his behalf, the project would get all 67K. Assuming a 15% tax rate, about 10 grand of what we raised goes to the IRS. 10 grand is an awful steep price to pay for not having an umbrella nonprofit to manage fundraising drives.

Rick, I'm fairly sure that's not at issue here. Even though I alerted them to be cognizant of that possibility, from what I can determine, this is not taxable income-they are clearly asking for money with no direct benefit to the giver and since they conditioned acceptance on a successfully preserving the locomotive, the gift won't even be a completed gift until and unless the mission is a success.

There's no restriction on soliciting gifts (or every teenager in America asking for and getting a car would have income from their parents/grandparents/etc.).

If there are any tax consequences, they would gift taxes, which are levied on the transferor (giver, not the getter) and only applicable if you have a sizable estate at death.

The flip side is gifts to individuals are not deductible, but the increase in standard deduction and reduction in rates make that less likely to be an issue for donors, and given that the average gift was something like $50, it's not that significant a problem.

Author:  Rick Rowlands [ Mon Mar 05, 2018 9:54 pm ]
Post subject:  Re: Should There Be an Emergency Locomotive Fund?

That is good to know Superheater. One less issue to deal with.

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