Should I file as a nonprofit JUST to host one fundraising dinner for a friend?

Question

I have a friend/hero who enjoyed hell so much, she's taking a second trip! cafepress dot com fwd slash helpshellyan

Anyhow, I'm doing the great friend thing and I've reserved a nice big boat, with fabulous food and entertainment, we've got items autographed from all over the sports world to auction off and we're setting sail in late October for the night of her LIFE!

I even have a guy at the newspaper to write an article to help us sell these tix. The print vendor is in line and EVERYBODY is donating their efforts!

Then it hit me,.will the feds haunt us in April? Can the already taxed out of pocket donations be subject to additional tax for a dinner auction fundraiser?

I read briefly about Non-Profit Orgs and whatnot but this seems like a ridiculous expectation if I'm doing this as a one night help a friend gesture.

But, I'd never forgive myself if we raised 40k that night and every penny got spent on her meds and the feds came knocking on her door for 10k in April?

Answer 1

If one of the attendees try to claim their donation (minus the value of dinner/entertainment) on their tax return, you might have a problem.

In the past, IRS has been really relax about charitable donation. Starting this year, however, even donate old cloth and books to Salvation Army require receipts.

Better safe than sorry. Look into it.

Best wishes.

Answer 2

No, you don't need to file a non-profit tax deductible status for this one event. You just have to make clear to people that donations are not tax deductible. Frankly, they wouldn't be, anyway. When people get a benefit, like a dinner or an item, even if it was donated, they get a form back that says, "You paid $200 for this painting. The actual value was $300. Therefore, your contribution is not tax deductible." Even when you get a mug from PBS, they have to tell you the retail value, even if they paid wholesale for it. So, just make clear that people shouldn't deduct their gifts, and you'll be fine. Email me if you have more questions.

Answer 3

It is not non profit it is IRS 501(c)(3) you need to worry about. Call CPA society and see if someone will do it for you for good cause pro bono.