Jim Henderson wrote:
> I know.  My point is that the tax you collect and pay on "stuff" that 
> people buy from you in the quantities you are talking about is sales 
> tax.  10,000 customer *buying* $20 of stuff from you requires that you 
> pay sales tax, not income tax.

So, if you make a living selling stuff at $20 a pop, you don't have to pay 
income tax no matter how much you'd make?

>>> Does *anyone* think the tax laws make sense?  I sure don't.
>> I'm pretty sure the owner of the local gas station pays income tax, even
>> tho he *never* gets a 1099, yes?
> 
> He would pay personal income tax, sure - because his business would 
> generate an 1099 for him.

Not if it's not a corporation. You don't issue a 1099 to yourself from yourself.

>>> Well, like I said, I'd have to check with our treasurer.  She said she
>>> "got it sorted out with the state", so I assume the state issued the
>>> certificate, and the feds accept that.
>> That's possible, but the designation as a 503(c) organization is an IRS
>> thing.
> 
> Yes, that makes sense. But that doesn't necessarily mean the feds get 
> involved when one is created.

Not necessarily, but they do. :-) It's a federal law that allows you to not 
pay income tax on your corporation or organization. I'm not sure why you 
wouldn't think the feds are involved in at least some sense.


>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>> Individual.
>>>> Well, a corporation has to report everything, even if they don't get a
>>>> 1099.
>>> Yes, but we were talking about individual income tax?
>> Yes.
> 
> So I'm not clear as to how we're getting them conflated.

Because an individual can't be a non-profit organization?

> If that's your job, then you *should* be working for a "company" entity, 
> even if it's a sole proprietorship and you're the only employee. 

It doesn't work that way. If you're a sole proprietor, you don't have a 
separate EIN for the business.

> That 
> way if the business tanks, it's the business' finances that are hosed and 
> not your personal when you file for bankruptcy.

That would be a corporation.

> So you - as the business - are responsible (as I understand it) for 
> reporting the business' income as an entity (quarterly as I understand 
> it) and then as an individual you are responsible for reporting your 
> salary from your business (and the business is responsible for reporting 
> that as well and dealing with withholdings and such).

That would be a corporation.

> I know a few folks who are independent consultants, and they all seem to 
> have incorporated a business for this purpose, as well as paying an 
> accountant to help them keep their books.

Yes. That would be a corporation. Not a sole proprietorship.

> Even as an advance, it was taxable income unless it was used to cover 
> business expenses - which in my case it was.  I probably could have made 
> it much simpler by incorporating myself, but for one book that seemed 
> like overkill.

Yes.

>>> Now I'll have to find the form.   It may be that I'm just remembering
>>> the boxes saying "0" for what was owed on it.
>> 1099's don't have a "how much you owe" box on them. Just google for
>> "form 1099" and suck it down off the IRS website.
> 
> Hmm, I might be thinking of box 4, which I see is the amount withheld.

Right, which is 0 unless you're getting backup withholding.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

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On Thu, 02 Apr 2009 21:48:53 -0700, Darren New wrote:

> Jim Henderson wrote:
>> I know.  My point is that the tax you collect and pay on "stuff" that
>> people buy from you in the quantities you are talking about is sales
>> tax.  10,000 customer *buying* $20 of stuff from you requires that you
>> pay sales tax, not income tax.
> 
> So, if you make a living selling stuff at $20 a pop, you don't have to
> pay income tax no matter how much you'd make?

That's not what I said.  The tax paid based on the sale of stuff at $20 
each you collect sales tax for.  If some portion of that translates into 
personal income, then you have to pay personal income tax on that, 
obviously.

>>>> Does *anyone* think the tax laws make sense?  I sure don't.
>>> I'm pretty sure the owner of the local gas station pays income tax,
>>> even tho he *never* gets a 1099, yes?
>> 
>> He would pay personal income tax, sure - because his business would
>> generate an 1099 for him.
> 
> Not if it's not a corporation. You don't issue a 1099 to yourself from
> yourself.

But a local gas station has to have a business license, and in order to 
have that, doesn't it have to be registered as some sort of corporation?

>> Yes, that makes sense. But that doesn't necessarily mean the feds get
>> involved when one is created.
> 
> Not necessarily, but they do. :-) It's a federal law that allows you to
> not pay income tax on your corporation or organization. I'm not sure why
> you wouldn't think the feds are involved in at least some sense.

You seemed to be suggesting that she would have had to meet with people 
from the IRS.  The feds are involved, sure, but that doesn't mean she met 
with them in order to get the nonprofit status sorted out.

>>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>>> Individual.
>>>>> Well, a corporation has to report everything, even if they don't get
>>>>> a 1099.
>>>> Yes, but we were talking about individual income tax?
>>> Yes.
>> 
>> So I'm not clear as to how we're getting them conflated.
> 
> Because an individual can't be a non-profit organization?

Well, if I was going to be facetious about it, I'd point out that there 
are plenty of people who personally don't make a profit. ;-)  But I see 
what you're saying.

>> If that's your job, then you *should* be working for a "company"
>> entity, even if it's a sole proprietorship and you're the only
>> employee.
> 
> It doesn't work that way. If you're a sole proprietor, you don't have a
> separate EIN for the business.

K, I'll take your word for that.

>> That
>> way if the business tanks, it's the business' finances that are hosed
>> and not your personal when you file for bankruptcy.
> 
> That would be a corporation.

Yes.

>> So you - as the business - are responsible (as I understand it) for
>> reporting the business' income as an entity (quarterly as I understand
>> it) and then as an individual you are responsible for reporting your
>> salary from your business (and the business is responsible for
>> reporting that as well and dealing with withholdings and such).
> 
> That would be a corporation.

Yes.

>> I know a few folks who are independent consultants, and they all seem
>> to have incorporated a business for this purpose, as well as paying an
>> accountant to help them keep their books.
> 
> Yes. That would be a corporation. Not a sole proprietorship.

Well, I was thinking the latter was a subset of the former.

It's apparently a good thing I'm not a tax consultant. ;-)

Jim

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Jim Henderson wrote:
> That's not what I said.  The tax paid based on the sale of stuff at $20 
> each you collect sales tax for.

Yes. That has nothing to do with income tax, tho, so I'm not sure why you 
bring it up.

> If some portion of that translates into 
> personal income, then you have to pay personal income tax on that, 
> obviously.

Even tho it isn't reported, right? :-)

> But a local gas station has to have a business license, and in order to 
> have that, doesn't it have to be registered as some sort of corporation?

No.  A corporation is a separate entity.  That's orthogonal to whether you 
need a license to do business.

> You seemed to be suggesting that she would have had to meet with people 
> from the IRS.  

Uh, no. I said you have to get permission from the feds. That doesn't imply 
meeting with them. It just implies that you follow the rules for them to 
approve it.

>>>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>>>> Individual.
>>>>>> Well, a corporation has to report everything, even if they don't get
>>>>>> a 1099.
>>>>> Yes, but we were talking about individual income tax?
>>>> Yes.
>>> So I'm not clear as to how we're getting them conflated.
>> Because an individual can't be a non-profit organization?
> 
> Well, if I was going to be facetious about it, I'd point out that there 
> are plenty of people who personally don't make a profit. ;-)  But I see 
> what you're saying.

There are plenty of for-profit corporations that don't make a profit either. 
I'm talking about the rules. :-)

All I'm saying is, a 503(c) is (usually) in the form of a corporation, and 
certainly is a distinct entity (perhaps a partnership or a non-revocable 
trust) and not an individual.  I'm also claiming that there are moneys that 
are never reported to the IRS that you nevertheless have to pay tax on, 
whether you're a corporation or an individual sole proprietor.

>> It doesn't work that way. If you're a sole proprietor, you don't have a
>> separate EIN for the business.
> 
> K, I'll take your word for that.

If you do, it's either a partnership or a corporation. That's why it's 
called a "corporation", see, because it has a "body" separate from you.

>>> That
>>> way if the business tanks, it's the business' finances that are hosed
>>> and not your personal when you file for bankruptcy.
>> That would be a corporation.
> 
> Yes.

It's a good idea. It's just not required. :-)

> Well, I was thinking the latter was a subset of the former.

No. :-)

> It's apparently a good thing I'm not a tax consultant. ;-)

Yes. ;-)

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

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Darren New wrote:
>> Well, I was thinking the latter was a subset of the former.
> No. :-)

To be more specific:

A sole proprietor is one person running a business as himself. So the guy 
you hire to mow your law is probably a sole proprietor. Your kid's 
babysitter is a sole proprietor. Etc.  You're using your same tax ID, and 
you're personally responsible for whatever happens - if you run over the 
neighbor's kid with the lawnmower, they'll get your house.

A partnership is when you have multiple individuals equally responsible but 
no stock as such. Each partner is responsible for all the others. This is 
usually how professionals (lawyers, doctors, etc) are required to work, so 
that people can sue the doctor himself if his doctor's office business 
amputates the wrong leg or something. E.g., lawyers aren't supposed to be 
making mistakes, so they can't incorporate to protect themselves from their 
own mistakes.

A limited partnership has two kinds of partners: general partners who run 
the business and can be sued and such, and limited partners who can't have 
any say in how the business is run, but still get some of the profits. Lots 
of times investors will set up one of these, let the nerds be the general 
partners, but take most of the resulting money.

A corporation is a separate legal entity with stocks. If the corporation 
does something wrong, you can sue the corporation but not someone who works 
for the corporation or who bought shares in the corporation. If the officers 
do something wrong corporation-wise, they can get sued (like, if they 
intentionally use the corporation to commit fraud), but for most mistakes, 
you're protected.  (To what extent depends on the state. In nevada, it's 
like 99.999% of the corporations protect the shareholders. In California, 
the courts let something close to 50% of the people suing a corporation also 
grab the money from the shareholders. Hence the prevalence of Nevada 
corporations even in other states.)

Sole proprietors pay income taxes as if they're individuals.

Partnerships pass all their money to the partners, who then have to pay the 
taxes. I.e., the partnership's money "flows through" to the individual 
partners in proportions, and then the partners report that and have to pay 
income taxes on it.

Corporations are legally speaking "people", so they pay their own income 
taxes. They're literally separate people as far as the law is concerned.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

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On Fri, 03 Apr 2009 10:28:50 -0700, Darren New wrote:

> Jim Henderson wrote:
>> That's not what I said.  The tax paid based on the sale of stuff at $20
>> each you collect sales tax for.
> 
> Yes. That has nothing to do with income tax, tho, so I'm not sure why
> you bring it up.

Because you were talking about tax on the proceeds from sale of 
products.  That's distinctly different from income.

>> If some portion of that translates into personal income, then you have
>> to pay personal income tax on that, obviously.
> 
> Even tho it isn't reported, right? :-)

If I sell 10,000 items for $20 each, then I'm working for a company 
that's reporting it.  As an individual, it would make more sense to 
incorporate and have the profits go to the business for reasons I already 
discussed earlier.

>> But a local gas station has to have a business license, and in order to
>> have that, doesn't it have to be registered as some sort of
>> corporation?
> 
> No.  A corporation is a separate entity.  That's orthogonal to whether
> you need a license to do business.

It was my understanding that you had to have a business entity in order 
to get a business license.  But I've never had to, so I'll take your word 
for that.

>> You seemed to be suggesting that she would have had to meet with people
>> from the IRS.
> 
> Uh, no. I said you have to get permission from the feds. That doesn't
> imply meeting with them. It just implies that you follow the rules for
> them to approve it.

K, fair enough.  When you say "involvement", I picture direct involvement.

>> Well, if I was going to be facetious about it, I'd point out that there
>> are plenty of people who personally don't make a profit. ;-)  But I see
>> what you're saying.
> 
> There are plenty of for-profit corporations that don't make a profit
> either. I'm talking about the rules. :-)

That's why I said "if I was going to be facetious about it". ;-)

> All I'm saying is, a 503(c) is (usually) in the form of a corporation,
> and certainly is a distinct entity (perhaps a partnership or a
> non-revocable trust) and not an individual.  I'm also claiming that
> there are moneys that are never reported to the IRS that you
> nevertheless have to pay tax on, whether you're a corporation or an
> individual sole proprietor.

OK.

>>> It doesn't work that way. If you're a sole proprietor, you don't have
>>> a separate EIN for the business.
>> 
>> K, I'll take your word for that.
> 
> If you do, it's either a partnership or a corporation. That's why it's
> called a "corporation", see, because it has a "body" separate from you.
> 
>>>> That
>>>> way if the business tanks, it's the business' finances that are hosed
>>>> and not your personal when you file for bankruptcy.
>>> That would be a corporation.
>> 
>> Yes.
> 
> It's a good idea. It's just not required. :-)
> 
>> Well, I was thinking the latter was a subset of the former.
> 
> No. :-)
> 
>> It's apparently a good thing I'm not a tax consultant. ;-)
> 
> Yes. ;-)

We've found common ground.  I'll stick to what I know. ;-)

Jim

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Jim Henderson wrote:
> Because you were talking about tax on the proceeds from sale of 
> products.  That's distinctly different from income.

Oh. Well, I was talking about income tax on the profits on sales of goods.

> If I sell 10,000 items for $20 each, then I'm working for a company 
> that's reporting it. 

Why do you say that?

> As an individual, it would make more sense to 
> incorporate and have the profits go to the business for reasons I already 
> discussed earlier.

Yes, but it's not required by law.

>> No.  A corporation is a separate entity.  That's orthogonal to whether
>> you need a license to do business.
> 
> It was my understanding that you had to have a business entity in order 
> to get a business license. 

You do. The business entity can be a sole proprietorship.

> K, fair enough.  When you say "involvement", I picture direct involvement.

If you set up your bylaws properly, you can just say "I followed the rules 
for setting up the bylaws."   You can do everything by mail. But the IRS has 
to at least get involved to the point where they issue the appropriate 
certification that your entity is tax exempt. I.e., they're at least as much 
involved as they are when you pay your income tax.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

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On Fri, 03 Apr 2009 12:12:18 -0700, Darren New wrote:

> Jim Henderson wrote:
>> Because you were talking about tax on the proceeds from sale of
>> products.  That's distinctly different from income.
> 
> Oh. Well, I was talking about income tax on the profits on sales of
> goods.

It sounded like you were talking retail sales, not income.  Hence the 
confusion.

>> If I sell 10,000 items for $20 each, then I'm working for a company
>> that's reporting it.
> 
> Why do you say that?

Assumption that if you're selling that kind of volume that there's a 
company involved - based on previous discussion, perhaps a false 
assumption on my part.

>> As an individual, it would make more sense to incorporate and have the
>> profits go to the business for reasons I already discussed earlier.
> 
> Yes, but it's not required by law.

Yeah, I see that now.

>>> No.  A corporation is a separate entity.  That's orthogonal to whether
>>> you need a license to do business.
>> 
>> It was my understanding that you had to have a business entity in order
>> to get a business license.
> 
> You do. The business entity can be a sole proprietorship.

See, it was my understanding that a sole proprietorship had to file the 
same type of paperwork on its finances to the IRS, including salary stuff 
and so on.

>> K, fair enough.  When you say "involvement", I picture direct
>> involvement.
> 
> If you set up your bylaws properly, you can just say "I followed the
> rules for setting up the bylaws."   You can do everything by mail. But
> the IRS has to at least get involved to the point where they issue the
> appropriate certification that your entity is tax exempt. I.e., they're
> at least as much involved as they are when you pay your income tax.

See, that's not what my understanding was.  My understanding was (is) 
that the state certifies the organization as tax-exempt and passes the 
information along to the IRS.

Jim

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Jim Henderson wrote:
> See, it was my understanding that a sole proprietorship had to file the 
> same type of paperwork on its finances to the IRS, including salary stuff 
> and so on.

A sole proprietorship doesn't have salaries. It's just one person.

> See, that's not what my understanding was.  My understanding was (is) 
> that the state certifies the organization as tax-exempt and passes the 
> information along to the IRS.

That's possible. http://en.wikipedia.org/wiki/501(c)#Obtaining_status
Depends on what kinds of things you're doing.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

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Nicolas Alvarez wrote:
> Pay someone, possibly outside the POV-Team, to work on POV-Ray code :)

Heh, that would be WAY more thana donation :-)

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Kenneth wrote:
> Those are my sentiments, too. The program is *so* amazing (and I spend so much
> wonderful time at it) that I would like to donate as well. Yet I see the
> logistical problems that have been mentioned here (who to give it to, how it
> would be distributed among POV-team members past and present, etc.)

This matter is internal to the POV-Team so it shouldn't concern us IMO, 
they will find a way to make a simple distribution after programming 
POV-Ray.

> But one thing hasn't been mentioned yet: Say one of us writes a piece of
> commercial software that incorporates POV-Ray as its "rendering engine" (or
> whatever.) If I'm not mistaken, there are legal mechanisms already in place
> whereby the "POV-Ray entity" (corporation, or whatever it is) profits from that
> in some way. So it seems to me that there might be some kind of monetary
> distribution scheme already in place, re: the development team. IF so, I can't
> see how voluntary donations would be much different from that, insofar as how
> the donations might be distributed.
> 
> KW

I've read that one one is to hire 1 or more POV-Team members for 
personalized or modified versions of POV-Ray for comercial or private 
uses, but yeah, that is good but would deviate the POV-Team from their 
main task.

Ironic enough, I have seen donationware that I would ashamed to ask 
money for, also many projects in sourceforge.net are donationware and 
they're rather simple compared to POV-Ray so those and other reasons led 
me to suggest it for POV-Ray.

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