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Benjamin A. Stolz
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Benjamin Stolz’s Answers

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  • Can a nonprofit 501 (c) (3) form a subsidiary? If so,can donors to the subsidiary get a tax-deduction from the parent nonprofit?

    The mission of the nonprofit is to share the gospel by providing free tennis instruction to as many economically disadvantaged children and youth as possible, help them become better students in the classroom, and equip them with life skills that ...

    Benjamin’s Answer

    There are simply to many variables to really respond here. You need to consider whether a parent-subsidiary structure is helpful or a hinderance. Every nonprofit is granted 501(c)(3) based on its stated mission and this is also set for in your incorporation paperwork under state law. If you deviate from that mission, you can get into trouble. In life keeping things simple is best. Also, from the sparse facts presented, it looks like a stand-alone Foundation might be something to consider since providing grants to Christian ministries seems to be its purpose.

    This can be complicated stuff and you have some admirable goals, so take the time to consult a local non-profit attorney. Doing this incorrectly could harm and not help your existing organization.

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  • Can a nonprofit 501 (c) (3) registered in one state conduct its activities in the other 49 states?

    Due to the success our nonprofit has experienced in one sate, we are interested in expanding into other states. How can we legally do this?

    Benjamin’s Answer

    Just wanted to add to my colleagues response. If you mean by expand, just expand your fundraising efforts but not your presence in those states, then perhaps this information will be helpful. Eleven states, including Arizona, Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, Texas, Vermont, and Wyoming don't require such registration for fundraising activities. But, if your nonprofit organization requests donations from residents of any one of the 40 states that require nonprofits to register in order to solicit contributions, then you will have to register in those states. Solicitations can include any type of requests for donations by mail, phone, advertisement, email, or Internet, regardless of whether your nonprofit actually receives any donations. This registration may be separate and apart from any registration to "do business" in a state. I mention this because simply having a website that solicits residents of other states can be enough these days to trigger registration requirements in some states. So, at least a couple considerations for you.

    I do recommend you discuss your plans with a local non-profit attorney who can best advise you of the many planning and operational requirements to expand. Congratulations on your success. Although unrelated to your question, you may find this organization useful --http://www.guidestar.org

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  • Setting up a charity fund for a friend after brain surgery...

    My friend recently went through brain surgery and I want to set up a fund to help him with his medical bills. Do I need a lawyer to start the charity fund? Thanks

    Benjamin’s Answer

    These days it is not always necessary to setup your own charity to get the job done:

    First, it is possible to make arrangements with a nonprofit charity that serves families in need or people with your friend's specific medical condition to receive the payments on his behalf.

    A charity can accept payments in your friend's name and give donors a tax deduction only when the organization provides services that are similar to his own needs. In this way, you avoid the costs in both time and money to get help to you friend.

    Second, a Donor can always write a check directly to the doctor or medical facility. The IRS does not place a limit on the amount or frequency of such donations when the money is paid to a professional medical provider and not given to your friend first.

    If you do choose to work with an established charity, the organization must be able to reserve the right to use the funds as necessary even if they are designated for your friend. This is a formality, but to keep the donation legally qualified for a tax deduction, the agreement must state that the organization can defer the money for other purposes.

    There are many other options as well including new crowd funding tools such as the Human Tribe Project (humantribeproject.com), FundRazr (fundrazr.com), GoFundMe (gofundme.com), GiveForward (giveforward.com) and others.

    Money may be tight, but many nonprofit attorneys offer free consultations and also offer some Pro Bono services. I believe a little time spent exploring your options with a nonprofit attorney will go a long way to getting something up and running without undue risk to you, your friend or the well-meaning folks willing to provide assistance.

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  • What is the risk in owning 10% equity in a startup? I am being asked to provide my time to help build leads for the business.

    A startup is offering me 10% equity in their company if I devote my time to helping them acquire X number of leads for their business. There is currently no salary or pay until they start turning a revenue. My question is what am I liable...

    Benjamin’s Answer

    Accepting stock for compensation can be very complicated and before you do so you should definitely speak to a business attorney familiar with start-ups. Without more details it is hard to comment in much details because there are so many ways stock could be awarded to an employee. However, just to give you one tax consideration, take a look at the great post by this attorney (below):

    http://ayrlaw.com/what-is-an-83b-election-and-when-do-i-make-it-part-1-with-graphic/

    It should at least give you some idea of what risks are involved in not using an attorney and the ramifications of not making informed decisions on equity compensation. Apart from this one small, but important consideration, as my colleague indicated there could be a lot at risk if not handled properly.

    Best of luck.

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  • I am leaving an LLC partnership, and upon leaving she wants me to sign a contract that bars me from competing in the same area.

    I started a partnership with a colleague in November and we filed for an LLC in February. Along the way we experienced conflicts regarding the direction of the company and I have currently decided to relinquish my duties with the company and resta...

    Benjamin’s Answer

    You cannot be forced to sign a non-compete. In general, most restraints on competition are unlawful under Texas law, but Covenants Not to Compete are an exception. Under the Texas Covenant's Not to Compete Act, a covenant not to compete may be enforceable if it is:

    1. Ancillary" to another enforceable agreement; and
    2. Reasonable

    Some LLC Operating agreements have "restrictive covenants" and depending on State law, they may or may not be enforceable against their members. It's not clear if your LLC docs have such a provision. The fact that you are being asked to sign a non-compete now might indicate that no such provision was in you Operating agreement.

    For example, If the Operating agreement had a provision disallowing members from leaving with a certain period of time without the consent of all members, she may want something in return for letting you go early.

    There are really any number of plausible reasons why you might be asked to sign a non-compete, but again it must be "ancillary" to an enforceable agreement whether that;s the Operating Agreement itself or some agreement.

    Whatever the case, a non-compete must also be "Reasonable". With respect to Reasonableness, a number of factors come into play:

    1. The covenant's duration should relate to the LLC's business needs. For example, if confidential information provided to you while working on the old company's business model has real value for two years, then a two year non-competition restriction might be valid.

    2, The geographical limitations should generally be no greater than the area in which you worked.

    There are a good deal of reasons why her request might be overreaching and ill-advised and more then a few that might make complete sense.

    I strongly advise you to contact a Business Law attorney to review your situation and get all the facts before making any decision to sign a potentially binding non-compete in Texas. Having "your" lawyer review a legal agreement does not need to make the situation confrontational - it's just good business.

    Best of luck.

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  • I am getting sued for a two year old car accident I am disable and cant work, I am filing bankruptcy, can they go after me?

    should I contact the attorney from the plaintiff to tell them I have nothing and can't work, I depend on government assistance and have two kids, is it possible they dismiss this, or should I just let them enter the judgement and put it in my bank...

    Benjamin’s Answer

    Just a quick mention. If you were intoxicated at the time of the accident, then you may want to advise your bankruptcy attorney. Debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated may be excepted from your bankruptcy discharge. Hopefully this circumstance does not apply, but it's important to describe the nature of the accident to your bankruptcy attorney as small details can make all the difference in the advise you receive.

    Best of Luck.

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  • Spouse has federal tax lien on property and the liability was incurred during a separation.

    We reconciled after the separation but are now divorcing. We never filed a joint return since before the lien was filed. The property is in both our names but the loan is i my name only. Spouse is not working to clear this up. What are my opti...

    Benjamin’s Answer

    In the community property states, a federal tax lien will always attach to all of the liable spouse’s separate property. Also, the tax lien will always attach to at least the liable spouse’s half interest in community property.

    Because each spouse has a half interest in community property, a federal tax lien attaches to 50% of all community property in Texas. However, Texas law also allows a creditor to reach 100% of the liable spouse's sole management community property and 100% of joint management community property to satisfy a premarital or post-marital debt.

    The Service may also supplement its federal remedies with state law remedies. Medaris v. United States, 884 F.2d 832 (5th Cir. 1989). Therefore, the Service can take 100% of the liable spouse's sole management community property and 100% of any joint management community property, plus 50% of all other community property.

    For example, the Service could reach 100% of the liable spouse's wages and 50% of the nonliable spouse's wages. If property subject to a lien is a homestead, which it appears to be the case here (or was), collection may be subject to other limitations, and you would be well advised to contact local counsel. Once your divorce is final, you should have little to worry about on the wage garnishment front. Wages of the nonliable spouse earned after the dissolution are no longer community property.However, its always possible any refund may be grabbed by the IRS and there may or may not be relief available there as well.

    Other remedies may exist if your ex-spouse failed to report income or improperly claimed deductions and you had no idea of same (or reason to know). Really, many variables impact seemingly simple situations. Its best you seek local counsel.

    Best of Luck.

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  • What are the tax implication to wire 50,000USD from Canada to USA??

    We sold our primary resident in Canada and planning to bring the money to purchase an investment property in USA, what are the tax implication of that..??

    Benjamin’s Answer

    If Canadians transfer money to the U.S. electronically from a Canadian bank to a U.S. bank, the the Canadian agent will do the proper reporting to the Canadian Government's FINTRAC. The American Bank will file its disclosures pursuant to the United States' Bank Secrecy Act (BSA). With respect to the IRS, I have included a little information below that may be helpful:

    If your intent is to live in the US permanently you should discuss moving your tax home with a local attorney; this requires severing all residential ties to Canada. In such as case, on your T1 for this year you will state the date you left and pro-rate your deductions and exemptions, etc. to the number of days you were in Canada. On the US end you have to file dual-status which is explained in IRS publication 519.


    The link below may help in connection with Canada and the IRS Publication should also help.

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  • Can a husband with general power of attorney but does not mention bankruptcy higer an attorney to repersent

    his wife in bankruptcy case and covert chapter 7 to 13 ?

    Benjamin’s Answer

    Just a quick comment:

    If you are concerned about a spouse using a general power of attorney (POA) to do something that you would not approve of yourself and without your knowledge, then you could consult a local attorney about "revoking" the POA. Although I agree with my colleague that few attorneys would accept one, if something untoward were to happen and a case was filed after you formally revoked the POA, you might have some luck getting the bankruptcy expunged by the Bankruptcy Court and removed from your credit bureau. Otherwise, if a bankruptcy were to be filed, it might be much more messy and expensive to clean up.

    Best of Luck.

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  • Going thru a divorce. How do I subpoena my spouse's tax returns?

    I've already asked for the tax returns and he has refused to give them. Can I handle the subpoena process myself, or do I have to have an attorney do it? Thank you.

    Benjamin’s Answer

    The process is called discovery. You must legally request what your looking for from the other party and there are some requirements that can limit the scope, but its a pretty broad scope.

    A few points I think have been repeated by others:

    (1) You should always carefully review your spouse’s tax returns.
    (2) During the discovery process of the case you should always request three to five years of tax returns.
    (3) Your spouse may be trying to hide money from you, but most people will not hide money from the IRS for fear of the potential tax penalties and possible criminal charges. Even a sneaky husband who is trying to hide income from you will think twice about trying to hide money from the IRS.
    (4) When you review the tax returns, you should pay careful attention to all of the income that is listed on the tax return for any investments such as stocks, partnerships, joint ventures, etc.

    There is much more to consider in any divorce. A good family attorney will know tax professionals and will be in a position to help. Its possible to represent yourself and do discovery on your own, but as I hinted at above -- it's not getting the information, it's interpreting it for signs of a spouse hiding assets. Go see a local attorney. Most attorneys have a free consultation.

    Best of Luck.

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