Mitch -

In your photo of the Southampton depot, is that an old train car I see next to the building in the background? Any closer photos of that building? BTW, your photos are great and really show how scenic the line really is.

Les

Critical distinction between "earned income" and "profit." Whatever income stream is used to further the nonprofit's mission - be it ticket sales, gift shop sales, donations or freight shipping, it's about how you use it more than what you did to get it (in grossly simplified terms.) GET GOOD QUALIFIED ADVICE.

Yes,think like an accountant - because accountants understand things from a critical POV when dealing with tax code. Think like railroaders when dealing with FRA, because railroaders understand railroading and FRA understands railroads. Claiming the privilege of approved specific ingorance about things that can ruin your day because you are "preservationists" won't prevent your day from being ruined - or your preservation efforts shut down.

We are in the business of preservation, if we want to be sustainable. We can enjoy the hobby of it personally if we don't care about sustainability, or any other person's gratification.

I can hardly believe it is still necessary to explain this..........

dave

That's the best advice yet.

What I remember being told by a lawyer and a tax accountant, is that a 501(c)3 cannot earn money by any means it chooses without restriction. The question is whether the money is earned in the course of executing your organizations mission. If you are a railroad museum, you can earn as much as you like selling memberships, admissions, running an educational seminar and things like that. But if you have a snack bar, there are limitations on how much of your total income can come from that. The difference is that selling food has nothing to do with preserving artifacts or educating the public about railroads. I believe that it is gross income that matters. I believe that there are percentage limitations and absolute limitations, and that there are taxes on the income outside those limits.

That's one reason why it would make sense for an operating museum to have a wholly owned subsidiary to do the freight work. The gross income moving freight would not count as income for the 501(c)3, just any net income after expenses.

It's likely that I'm not getting this exactly right, so check with your tax accountant.

-Mark

That's the enclosure (showroom and store) around the tail track for the Oscar Huber Furniture Company's coal trestle. The bumper sticks out of the back end, nearest to the camera.

For those of us involved in the "behind the scenes" administration, finances and business end of things, the IRS form 990 with schedules that we all have to submit by May 15th each year is a very important report. Schedule A of the IRS Form 990 has a section that addresses "public support." Public support is important according to the IRS and apparently income from what's considered public support must be at least 33 1/3 percent.

This group needs lots of help to provide the realities of museums like ours. Good financial advice and a good accountant are a must. It also helps to have legal advice from a firm that has a lawyer or two who knows the ins and outs of charitable and tax exempt groups. The legal advice we got helped our organization immensely when we were going through the throes of separating from the Minnesota Transportation Museum back in 2005.

And don't feel bashful to talk to or go visit Indiana Ry Museum, TVRM , or some other museum. Most, if not all, will be happy to offer advice and provide lessons learned.

Thanks!

Superheater, Stop thinking only in terms of accounting, this is a forum on preservation and there are non-profits and for-profit organizations involved, that is the context we use the terms in.

I realize I'm tilting at windmills.

Critical distinction between "earned income" and "profit." Whatever income stream is used to further the nonprofit's mission - be it ticket sales, gift shop sales, donations or freight shipping, it's about how you use it more than what you did to get it (in grossly simplified terms.) GET GOOD QUALIFIED ADVICE.

I hate to be disputatious when somebody offers the rare injunction to think like an accountant rather than not to AND its not sarcasm but I must even though it pains me to do so.

The distinction you are thinking about is income related to exempt purpose and unrelated business income (UBI)

More importantly, the taxability of income IS determined by how its generated, not used. (oh if it were only use) See Item 4 Pub 598. Notice the use of the term "derived".

http://www.irs.gov/pub/irs-pdf/p598.pdf

This gets confused because people see their local fire department have a chicken barbeque and assume that as long as it goes to a good cause, its exempt-but the reason the FD CBBQ is exempt is because its infrequent and staffed mostly by volunteers, and specifically exempt-not because its for a good cause.

(The general rule of taxation pursuant to Internal Revenue Code Sec. 61-Anything you get is taxable income unless its specifically exempted)

Good Qualified Advice for Dealing with the IRS:

Attorneys
CPA's
Enrolled Agents

Good Qualified Advice for Dealing with the State Incorporation and Charity Bureaus:

Attorneys (in my state, but I suspect most if not all others, a few years ago, the Bar went after a CPA helping people fill in a routine incorporation form for unauthorized practice of law-you can guess how that played out before lawyer judges)

If you don't get the above help with your 990/business issues-its sort of like having me opine on your Form 4-with the same predictable result-KABOOM.

It also depends whether the chickens that go on the firemans' BBQ grill are free (donated), cheap, or gourmet.

Oh please. Would it kill any of you to pick up a book???

Honestly. This stuff is not that hard. The problem you have on Rypn is people who know little are all too quick to share their opinions, therefore they assume everyone else on Rypn knows nothing more than them. They cannot recognize expertise.


Then you pay for it. Any jackass can sit in their easy chair and tell others to spend money. You are scaring the daylights out of people and teaching them to be helpless and put their dreams out of reach, and for what?

Competent people are perfectly capable of doing this themselves without the slightest bit of trouble. Yes you have to be diligent and careful. That is all.

Yes I walk my talk. Before I picked up a book, I paid an attorney three grand to create the suite of nonprofit paperwork. It was totally unworkable junk. It completely ignored the type of structure I had told him I needed, if I had listened to him I'd have a private foundation instead of a supporting org. Superheater you know how wrong he'd led me. Anyway I had to redo all the paperwork, myself, from scratch. New articles, new bylaws, new 1023. This went right over my lawyers head. The new lawyer looked at my paperwork and said "wow, my work is done." he charged me half the first guy.

Lessons?
1. I'm not anybody special. If I can do it you can do it, unless you already know everything. The key to learning is to know you don't know, then want to know!
2. The lawyers did a lot of stuff wrong. They're not incompetent. It's a communication gap. They don't know your business like you do.
3. Lawyers are hecka expensive!

There are times you need professionals, but not near as many as professionals would like. OP is referring to one that definitely does not IMO. He has time to learn and iterate.

His best resources are Nolo Press and IRS.gov. Start writing articles, bylaws and 1023. They will change a lot.

And superheater you can do a fine form 4. We've talked about the myth of specialization in the past.

Until you posted the pictures, I wasn't quite sure of the line which was in question. Having seen the pictures, I recognized the line since I used to cross those tracks regularly. The Southampton station crossing is where the terrible accident happened that eventually killed the RDC engineer. The other participant was a gas tanker. I don't think it was much after that the line was shut down. And I remember seeing the RDCs sitting on the north side of Street Rd near the Naval airstation after they shortened the line. It looks like a really nice line to save.

Later!
Mr. Ed

The RDCs on the North side of Street Rd. grade crossing by the Johnsville Naval Air Development Center were Boston & Maine cars being stored on the New Hope & Ivyland RR. The Newtown branch goes under Street Rd. near Southampton, the grade crossing there was replaced many years ago.

"I paid an attorney three grand to create the suite of nonprofit paperwork. It was totally unworkable junk. It completely ignored the type of structure I had told him I needed, if I had listened to him I'd have a private foundation instead of a supporting org. Superheater you know how wrong he'd led me. Anyway I had to redo all the paperwork, myself, from scratch. New articles, new bylaws, new 1023. "

Years ago, in another life, I was involved in assisting my employer's clients transition from their existing 401k plans to our "prototype" (check the box, limited options) plan. One day, I received a plan to convert from a machine shop in Ohio. As I read the plan, I saw there was a huge boo-boo and had to tell the nice fellow that we could not continue until he provided us with a letter from legal counsel stating that they would pursue the appropriate remedies. He responded that he already had a lawyer. Upon further questioning I found out that his plan was written by his divorce lawyer, not an employee benefits specialist. Yes, there are bad professionals.

However, for every one person that's a lucky enough autodidact to decipher the opaque jargon that peppers legal and tax forms, laws & regulations,there's hundreds that get it wrong and/or spend inordinate time doing it. Your time has value. I suspect most folks on this board would rather be in the shop rather than Nolo or IRS.gov.

And no, I can't do a Form 4 (certainly not professionally), due to the following:

http://www.aicpa.org/Research/Standards/CodeofConduct/Pages/et_200.aspx#et_201.02

I'm done now.

Folks, go back and read the guy's initial post. He is talking about starting by clearing part of the right of way as a walking path or maybe for track cars. I know he says eventual they dream of running trains. But as you can see from the photos you are looking at years of volunteer work just to make it passable before you can even think about the track condition. Yet I see people arguing over freight service and what lawyers and accountants they should talk to! Come on! Let them get some popular support before you have them recreating the Reading! The first big issue will be SEPTA - will they let someone on the property? Perhaps if these people put together local support and approach them with a modest first step - say a mile or two of cleanup adjacent to some public access point may be they will let it happen. I know of two efforts to reopen the line that SEPTA shot down. Each of them talked about some day offering passenger service some day which seemed to be a trip wire for SEPTA.

Perhaps a useful first step would be to contact the West Chester RR folks. They have successfully returned another SEPTA line to service and even ran an excursion onto active SEPTA lines. Whatever they negotiated would seem to be the model.

I happen to know some folks from the area.

The danger you run into is that there's a faction already advocating for a rail-trail, and has been for some time.

Thus far SEPTA has kept everybody--the daisy-pickers, the bicyclists, the wannabe commuters, and the wannabe railroaders--at bay, and have done so for nearly thirty years. But if you start as a trail and then try to go back to railroad operation, you're going to run into the same problem as happened elsewhere--once you give 'em a trail, you'll never get it back from them.