On 1/2/06, Sam Korn smoddy@gmail.com wrote:
On 1/2/06, Anthony DiPierro wikilegal@inbox.org wrote:
"I can't imagine Mediawiki would even consider something which would endanger its not-for-profit status so I doubt this is a problem." The thing is, I doubt very many people are aware of all the intricacies of US non-profit tax laws. Most people don't know what UBTI even is.
Why would WMF worry about not being not-for-profit if it were getting all its money from ads? Is there some other benefit apart from being tax-exempt? If the net financial gain would still be an increase in income, the paying tax seems irrelevant.
Or have I missed something crucial? (Note that I am British and take pride in knowing very little of the intricacies of US law.)
-- Sam
The excise taxes on running a non-profit organization as a for-profit corporation go up to 200% if you don't eventually correct the situation. Yes, 200%, that means if you make $100 in net profits you owe $200 in taxes. You're much better off dissolving the non-profit and forming a for-profit corporation than running a non-profit as a for-profit :).
Of course in reality what would happen far before any of that took place is that the WMF could form a for-profit company which would pay taxes and would be owned by the non-profit. That's how the IRS wants you to do things, in essence it's how they force you to do things.
Anthony