On Thu, 02 Apr 2009 14:45:47 -0700, Darren New wrote:

> Jim Henderson wrote:
>> There's no guarantee he'd need to pay income tax on it.  I don't know
>> what the tax law is in Australia, but here in the US, you can register
>> as a nonprofit organization.  I suspect you can in Australia as well.
> 
> That's probably pretty expensive right there. :-)

I don't know; our local community organization recently submitted 
paperwork to reinstate their non-profit status as a 503(c)(4) non-profit, 
and I don't know that there was any cost.

>> But if the contributions are low enough, they're not taxable anyways. 
>> I know this is the case in the US - income < $600 doesn't have to be
>> reported (I collected about $50 last year in book royalties).
> 
> Note that "doesn't need to be reported" != "not taxable".

A minor distinction, since the low income isn't required to be reported 
even - but even if it is reported, it in and of itself isn't taxed.

I went through this whole thing when my first book was published, because 
the advance was taxable but the taxes weren't taken off the top.  :-)

>> Financing development isn't really the issue, I think.  It's that Saul
>> would like to give back in some way.  I think the sentiment is a good
>> one with any "free" development effort.
> 
> A fund to help pay hosting fees, or against rainy days like the server
> dying, would seem to be reasonable.  I don't know that there's any
> reasonable way to split up donations directly to the contributors.

I would say that the "rainy day" fund makes the most sense to me.

Jim

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Jim Henderson wrote:
> I don't know; our local community organization recently submitted 
> paperwork to reinstate their non-profit status as a 503(c)(4) non-profit, 
> and I don't know that there was any cost.

Dunno. Even setting up an maintaining any corporation can be expensive. At 
least in the USA.  California has $800/year tax, a registration fee every 
year, and if you do business somewhere else you have to register there and 
pay for a resident agent. You undoubtedly have to maintain a separate bank 
account and file taxes for the thing, which is time and energy better spent 
improving POV or otherwise getting on with a life.

>>> But if the contributions are low enough, they're not taxable anyways. 
>>> I know this is the case in the US - income < $600 doesn't have to be
>>> reported (I collected about $50 last year in book royalties).
>> Note that "doesn't need to be reported" != "not taxable".
> 
> A minor distinction, since the low income isn't required to be reported 
> even - but even if it is reported, it in and of itself isn't taxed.

Depends on how much you make. If you get 3000 payments of $500 each, you 
certainly better be reporting them yourself.

And if you're actually a corporation, you certainly have to report all your 
payments even if they didn't get reported.

> I went through this whole thing when my first book was published, because 
> the advance was taxable but the taxes weren't taken off the top.  :-)

Yep. I've run a number of small companies, and the reporting and such is 
quite a mess.

> I would say that the "rainy day" fund makes the most sense to me.

Based on what I know of US laws, putting together a trust is probably the 
easiest and cheapest way to go about it. Of course, much of the POV team 
seems to be in european countries, so I have no idea. IANAL, IANAA, etc.

-- 
   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 15:52:55 -0700, Darren New wrote:

> Jim Henderson wrote:
>> I don't know; our local community organization recently submitted
>> paperwork to reinstate their non-profit status as a 503(c)(4)
>> non-profit, and I don't know that there was any cost.
> 
> Dunno. Even setting up an maintaining any corporation can be expensive.
> At least in the USA.  California has $800/year tax, a registration fee
> every year, and if you do business somewhere else you have to register
> there and pay for a resident agent. You undoubtedly have to maintain a
> separate bank account and file taxes for the thing, which is time and
> energy better spent improving POV or otherwise getting on with a life.

Corporation != Non-Profit Organization, though.  I'm talking like a 503
(c) organization.

>>>> But if the contributions are low enough, they're not taxable anyways.
>>>> I know this is the case in the US - income < $600 doesn't have to be
>>>> reported (I collected about $50 last year in book royalties).
>>> Note that "doesn't need to be reported" != "not taxable".
>> 
>> A minor distinction, since the low income isn't required to be reported
>> even - but even if it is reported, it in and of itself isn't taxed.
> 
> Depends on how much you make. If you get 3000 payments of $500 each, you
> certainly better be reporting them yourself.

The $600 value is per payer, if you get 3000 payments of $500 each from a 
publisher, they're required to report the income, as are you.

But if you publish 10 different books, each through a different 
publisher, and only make $500 from each one, then it's not reportable 
income and you don't owe taxes on it.  At least that's my understanding.

> And if you're actually a corporation, you certainly have to report all
> your payments even if they didn't get reported.

But again, corporation != non-profit.

>> I went through this whole thing when my first book was published,
>> because the advance was taxable but the taxes weren't taken off the
>> top.  :-)
> 
> Yep. I've run a number of small companies, and the reporting and such is
> quite a mess.

Then you're probably in a better position to comment than me. ;-)  I've 
only taken the payments, but what I've written is my understanding based 
on my experiences.

>> I would say that the "rainy day" fund makes the most sense to me.
> 
> Based on what I know of US laws, putting together a trust is probably
> the easiest and cheapest way to go about it. Of course, much of the POV
> team seems to be in european countries, so I have no idea. IANAL, IANAA,
> etc.

That might be the case, yes.  And same disclaimers apply here to me. :-)

Jim

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Jim Henderson wrote:
> Corporation != Non-Profit Organization, though.  I'm talking like a 503
> (c) organization.

Sure it is. It's just taxed differently in return for not giving monetary 
benefits to shareholders.

> But if you publish 10 different books, each through a different 
> publisher, and only make $500 from each one, then it's not reportable 
> income and you don't owe taxes on it.  At least that's my understanding.

I'm pretty sure you owe tax on it even if it's not reportable. Otherwise, 
you wouldn't pay income tax if you had 10,000 customers a year each buy $20 
of stuff from you.

>> And if you're actually a corporation, you certainly have to report all
>> your payments even if they didn't get reported.
> 
> But again, corporation != non-profit.

Yes, it is, in the US.  Or at least it can be, and usually is. Actually, I'm 
even pretty sure that in most states, *first* you set up the corporation, 
then you show the bylaws to the IRS and they decide whether you can be 
counted as a non-profit.

Granted, there may be different sets of fees for NPOs and C-Corps or 
S-Corps, but you still need directors, corporate books, separate tax filing, 
and so on.

> Then you're probably in a better position to comment than me. ;-)  I've 
> only taken the payments, but what I've written is my understanding based 
> on my experiences.

Did you take them as an individual, or a corporation, or what?

One payment of $500 to an individual will likely not get you in trouble. 
You're supposed to report it, but there's no proof.

-- 
   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 17:58:33 -0700, Darren New wrote:

> Jim Henderson wrote:
>> Corporation != Non-Profit Organization, though.  I'm talking like a 503
>> (c) organization.
> 
> Sure it is. It's just taxed differently in return for not giving
> monetary benefits to shareholders.

I'll have to check with our treasurer, but I think she'd have said 
something if we had to dip into the bank accounts.

>> But if you publish 10 different books, each through a different
>> publisher, and only make $500 from each one, then it's not reportable
>> income and you don't owe taxes on it.  At least that's my
>> understanding.
> 
> I'm pretty sure you owe tax on it even if it's not reportable.
> Otherwise, you wouldn't pay income tax if you had 10,000 customers a
> year each buy $20 of stuff from you.

That's sales tax, not income tax.  From a personal income tax standpoint, 
the law states that < $600 isn't taxed (at the federal level, state laws 
may differ).

>>> And if you're actually a corporation, you certainly have to report all
>>> your payments even if they didn't get reported.
>> 
>> But again, corporation != non-profit.
> 
> Yes, it is, in the US.  Or at least it can be, and usually is. Actually,
> I'm even pretty sure that in most states, *first* you set up the
> corporation, then you show the bylaws to the IRS and they decide whether
> you can be counted as a non-profit.

I don't know that it was the IRS that we had to talk to - seems it was 
someone here in the state of Utah offices, not the feds.

> Granted, there may be different sets of fees for NPOs and C-Corps or
> S-Corps, but you still need directors, corporate books, separate tax
> filing, and so on.
> 
>> Then you're probably in a better position to comment than me. ;-)  I've
>> only taken the payments, but what I've written is my understanding
>> based on my experiences.
> 
> Did you take them as an individual, or a corporation, or what?

Individual.

> One payment of $500 to an individual will likely not get you in trouble.
> You're supposed to report it, but there's no proof.

The 1099 that the publisher submitted clearly stated that there was no 
tax liability that they reported, and did include the figures IIRC for 
the amount of royalties.

Jim

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Jim Henderson wrote:
> That's sales tax, not income tax. 

That's not what I'm talking about.  I'm talking about income tax.

> From a personal income tax standpoint, 
> the law states that < $600 isn't taxed (at the federal level, state laws 
> may differ).

Yes. But $60,000 is, even if it comes from 200 different contract jobs. 
Don't you think?  I mean, I'm not going to sit down and grub thru the income 
tax laws *again*, since I just finished that earlier this week, but it 
wouldn't make sense, would it?

> I don't know that it was the IRS that we had to talk to - seems it was 
> someone here in the state of Utah offices, not the feds.

503(c) is a reference to the IRS tax laws, just like 401(k) is. I don't 
doubt you talked to someone in the Utah offices also.

>> 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.

As an individual, I don't see anything on 1099-MISC that says the amount 
isn't taxable. It looks like it goes into Schedule C, according to the 
instructions.

Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure that 
doesn't *legally* let you off the hook for reporting it. It just means the 
IRS isn't going to be able to catch you easily.

>> One payment of $500 to an individual will likely not get you in trouble.
>> You're supposed to report it, but there's no proof.
> 
> The 1099 that the publisher submitted clearly stated that there was no 
> tax liability that they reported, and did include the figures IIRC for 
> the amount of royalties.

Huh. Very weird. Because that's not anywhere on the 1099. I can't imagine 
they *did* send you a 1099 and you didn't have to report the income.

I do love box 13 for 2009: "Excess Golden Parachute Payments."

-- 
   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 20:08:08 -0700, Darren New wrote:

> Jim Henderson wrote:
>> That's sales tax, not income tax.
> 
> That's not what I'm talking about.  I'm talking about income tax.

So am I.  But you said:

"Otherwise, you wouldn't pay income tax if you had 10,000 customers a 
year each buy $20 of stuff from you."

*That* is sales tax.

>> From a personal income tax standpoint, the law states that < $600 isn't
>> taxed (at the federal level, state laws may differ).
> 
> Yes. But $60,000 is, even if it comes from 200 different contract jobs.
> Don't you think?  I mean, I'm not going to sit down and grub thru the
> income tax laws *again*, since I just finished that earlier this week,
> but it wouldn't make sense, would it?

Does *anyone* think the tax laws make sense?  I sure don't.

>> I don't know that it was the IRS that we had to talk to - seems it was
>> someone here in the state of Utah offices, not the feds.
> 
> 503(c) is a reference to the IRS tax laws, just like 401(k) is. I don't
> doubt you talked to someone in the Utah offices also.

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.

>>> 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?

Oh, wait, I think I see now where the misunderstanding is.  We're talking 
at cross-purposes again.  We got on the subject of income tax and I 
assumed "individual" and you are talking about for an entity, not an 
individual.

> As an individual, I don't see anything on 1099-MISC that says the amount
> isn't taxable. It looks like it goes into Schedule C, according to the
> instructions.
> 
> Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure
> that doesn't *legally* let you off the hook for reporting it. It just
> means the IRS isn't going to be able to catch you easily.

I got a 1099 for <$600.

But I suppose "not going to be able to catch you easily" also translates 
to "not worth their while".

But on my individual income taxes back when I got the advance (which was 
more than $600 and I got nailed for the taxes, or would have if the 
expenditure hadn't been tax-deductible), I talked to a tax accountant 
about the situation, and he explained it to me then.

Now that was almost 15 years ago, too.

>>> One payment of $500 to an individual will likely not get you in
>>> trouble. You're supposed to report it, but there's no proof.
>> 
>> The 1099 that the publisher submitted clearly stated that there was no
>> tax liability that they reported, and did include the figures IIRC for
>> the amount of royalties.
> 
> Huh. Very weird. Because that's not anywhere on the 1099. I can't
> imagine they *did* send you a 1099 and you didn't have to report the
> income.

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.  We did file our taxes before 
that one came in, though - I think this year it was actually < $100.  
Nonfiction books for a very small segment of a targeted market segment 
tend not to be real moneymakers.  Just a good way to get your name known

> I do love box 13 for 2009: "Excess Golden Parachute Payments."

LOL, that's a good one.

Jim

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Jim Henderson wrote:
> On Thu, 02 Apr 2009 20:08:08 -0700, Darren New wrote:
> 
>> Jim Henderson wrote:
>>> That's sales tax, not income tax.
>> That's not what I'm talking about.  I'm talking about income tax.
> 
> So am I.  But you said:
> 
> "Otherwise, you wouldn't pay income tax if you had 10,000 customers a 
> year each buy $20 of stuff from you."
> 
> *That* is sales tax.

I'm confused. I said income tax, you said sales tax. The two are unrelated.

> 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?

> 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.

>>>> 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.

> Oh, wait, I think I see now where the misunderstanding is.  We're talking 
> at cross-purposes again.  We got on the subject of income tax and I 
> assumed "individual" and you are talking about for an entity, not an 
> individual.

I'm talking about both. If your job is buying $50 parts, fixing them, and 
selling them for $100 on eBay, and you make $100,000 a year doing that, are 
you paying income tax? Sure. Who reports your sales to the IRS? Nobody but 
you. That's what I'm saying.

>> Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure
>> that doesn't *legally* let you off the hook for reporting it. It just
>> means the IRS isn't going to be able to catch you easily.
> 
> I got a 1099 for <$600.
> 
> But I suppose "not going to be able to catch you easily" also translates 
> to "not worth their while".

Possibly. But I'm trying to distinguish between "practically get in trouble" 
and "is illegal."  If I rent a DVD and show it on the big-screen TV at my 
sports bar, I'm also violating copyrights legally and also unlikely to get 
in trouble for it.

> But on my individual income taxes back when I got the advance (which was 
> more than $600 and I got nailed for the taxes, or would have if the 
> expenditure hadn't been tax-deductible), I talked to a tax accountant 
> about the situation, and he explained it to me then.

It's possibly because it was an advance, and you would have had to pay it 
back had you not finished the book, or something like that. I.e., it might 
have had nothing to do with the amount and more to do with when you were 
officially booking the income.

> 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.

> Nonfiction books for a very small segment of a targeted market segment 
> tend not to be real moneymakers.  Just a good way to get your name known

Sounds that way. :-)

>> I do love box 13 for 2009: "Excess Golden Parachute Payments."
> LOL, that's a good one.

I think it's the whole AIG thing.

-- 
   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 20:46:51 -0700, Darren New wrote:

> Jim Henderson wrote:
>> On Thu, 02 Apr 2009 20:08:08 -0700, Darren New wrote:
>> 
>>> Jim Henderson wrote:
>>>> That's sales tax, not income tax.
>>> That's not what I'm talking about.  I'm talking about income tax.
>> 
>> So am I.  But you said:
>> 
>> "Otherwise, you wouldn't pay income tax if you had 10,000 customers a
>> year each buy $20 of stuff from you."
>> 
>> *That* is sales tax.
> 
> I'm confused. I said income tax, you said sales tax. The two are
> unrelated.

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.

>> 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.

>> 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.

>>>>> 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.

>> Oh, wait, I think I see now where the misunderstanding is.  We're
>> talking at cross-purposes again.  We got on the subject of income tax
>> and I assumed "individual" and you are talking about for an entity, not
>> an individual.
> 
> I'm talking about both. If your job is buying $50 parts, fixing them,
> and selling them for $100 on eBay, and you make $100,000 a year doing
> that, are you paying income tax? Sure. Who reports your sales to the
> IRS? Nobody but you. That's what I'm 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.  That 
way if the business tanks, it's the business' finances that are hosed and 
not your personal when you file for bankruptcy.

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).

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.

>>> Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure
>>> that doesn't *legally* let you off the hook for reporting it. It just
>>> means the IRS isn't going to be able to catch you easily.
>> 
>> I got a 1099 for <$600.
>> 
>> But I suppose "not going to be able to catch you easily" also
>> translates to "not worth their while".
> 
> Possibly. But I'm trying to distinguish between "practically get in
> trouble" and "is illegal."  If I rent a DVD and show it on the
> big-screen TV at my sports bar, I'm also violating copyrights legally
> and also unlikely to get in trouble for it.

Well, that depends on if Jack Vallenti is a patron or not. ;-)

But I see what you're saying.

>> But on my individual income taxes back when I got the advance (which
>> was more than $600 and I got nailed for the taxes, or would have if the
>> expenditure hadn't been tax-deductible), I talked to a tax accountant
>> about the situation, and he explained it to me then.
> 
> It's possibly because it was an advance, and you would have had to pay
> it back had you not finished the book, or something like that. I.e., it
> might have had nothing to do with the amount and more to do with when
> you were officially booking the income.

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.

>> 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.

>> Nonfiction books for a very small segment of a targeted market segment
>> tend not to be real moneymakers.  Just a good way to get your name
>> known
> 
> Sounds that way. :-)

Yeah.  It did work to get my name out there in that particular part of 
the customer base, no doubt about it. :-)  In a way it's like Ward 
Christenson (developer of XMODEM) said to me once on CompuServe when I 
asked if he was *that* Ward Christenson - he said "yeah, that and $0.25 
will get me a diet Coke".  :-)

>>> I do love box 13 for 2009: "Excess Golden Parachute Payments."
>> LOL, that's a good one.
> 
> I think it's the whole AIG thing.

I had a similar thought. :-)

Jim

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Saul Luizaga <sau### [at] netscapenet> wrote:

>
> I simply find it not fair at all POV-Ray not being donationware.
>
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.)

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

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