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Selling Book On Amazon.com

Business Law discussions

Selling Book On Amazon.com

Postby Kalb » Tue Aug 23, 2016 1:04 pm

We are a 501c3 public charity providing undergraduate education in the US for war-displaced students from the Middle East. The students have written prose and poetry to relate their experiences before and after becoming refugees. May we sell the book(under 100 pages; c. $25) to raise awareness of the need for our work and the plight our work addresses? All income would be used to support the educational objectives of our mission. Thank you.
Kalb
 
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Joined: Sat Apr 05, 2014 3:12 pm

Selling Book On Amazon.com

Postby Cuddy » Fri Aug 26, 2016 2:33 pm

You may certainly sell such a book as it appears that the gross income will result in less than 5% of your organization's annual gross income.  But the question is whether the income is taxable.

IRS Publication 598 "Tax on Unrelated Business Income of Exempt

Organizations" at

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

explains that,  if products or services are not directly related to

the charitable, educational, religious or other purpose or function

constituting the basis for its exemption(other than for production

of income), then the activities are generally taxable.

Their exact wording is found in the middle column of page 3

"Unrelated business income is the income from a

trade or business that is regularly carried on by

an exempt organization and that is not substan-

tially related to the performance by the organiza-

tion of its exempt purpose or function, except

that the organization uses the profits derived

from this activity."

The first question is whether the book is substantially related to the performance by your organization of its exempt purpose or function,

I would not be able to analyze that unless I read the book, but it appears, from what you wrote, that the content of the book is largely such.

The IRS has declared, "Nonprofit organizations that are granted

Federal tax exemption based on their mission-related purposes

are allowed by the IRS, within certain limits, to generate income

from unrelated business activities."

www.irs.gov/pub/irs-soi/97eounrl.pdf on pdf page 1

The organization could, if it has more unrelated activities than

the IRS's vague "certain limit", be jeopardizing its exemption

depending upon the facts and circumstances. Two of the main factors

is the gross income of the activity in relation to the gross income

of the organization's total income and staff time spent on the

activity. Court cases reveal that 5% is probably safe, whereas 20%

or more can jeopardize exempt status. Harvey Mechanic, Attorney at Law - [email protected]
Cuddy
 
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Joined: Tue Jan 07, 2014 4:34 pm

Selling Book On Amazon.com

Postby cadwallader » Tue Aug 30, 2016 2:14 pm

We are a 501c3 public charity providing undergraduate education in the US for war-displaced students from the Middle East. The students have written prose and poetry to relate their experiences before and after becoming refugees. May we sell the book(under 100 pages; c. $25) to raise awareness of the need for our work and the plight our work addresses? All income would be used to support the educational objectives of our mission. Thank you.
cadwallader
 
Posts: 50
Joined: Wed May 22, 2013 9:38 am


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