Today TaxMama hears from Kevin in Florida with this interesting idea. “I need advice setting up a corporation (or partnership, LLC, etc…).
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The question is which one? I, and 3 good friends want to incorporate ourselves to form a business for the sole purpose of purchasing season tickets under one name. The advantage – with escalating prices yearly, we can have other friends join, without losing our ticket priority, in the event one of us cannot meet the financial requirements in a given year. The name of the ‘ticket holder’ cannot be transferred.”
Dear Kevin,
Very interesting. What a great concept – having one named buyer for the tickets, so regardless of the participants involved – you don’t lose your priority position or your priority seating.
What’s the best way to do this? You could just form a partnership. There are no fees involved.
The only problem with a partnership is that as members come and go, transferring the partnership shares could be a problem. In fact, the partnership could inadvertently dissolve, if more than 50% of the partnership changes hands in any one year.
You could form an association, which is probably the best option, since you’re most likely passing on the tickets at cost, or at cost, plus expenses. But associations need to file for non-profit status, for the long term.
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You can form a loose association for a while. but for longevity – you’d need to file docs. Form 1023 https://www.irs.gov/pub/irs-pdf/f1023.pdf
Here is an excellent site that can walk you through the application process. https://form1023help.com/
The corporation idea is a good one. You could form an LLC, then elect to file as an S-corporation and profits or losses would be passed on to the shareholders.
Note: when you incorporate or use any other ‘business’ structure, your overall intentions must be to generate a profit.
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You will not be permitted to operate for years at a loss.
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You need to develop a business plan that shows when you expect to have profits. Soon.
One word of warning. Especially since, once you start this, you’re apt to extend your purchases to other venues in other states. Do some research on the rules for ticket brokering in each state. You may fall under consumer laws, or licensing laws, or scalping laws. Let’s face it, the brokers don’t like private competition and they may have political clout.
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Personally, if I were you, I’d sit down with a good tax professional who has some vision. Discuss what you want to do in the long run. This could turn into a really terrific club that you could run for life.
Good luck. It sounds like a fun project.
And remember, you can find answers to all kinds of questions about tickets and other tax issues, free. Where? Where else? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- IRS Form 1023 :: Application for Non-Profit Organizations
- Form1023help.com :: Sandy Deja’s excellent non-profit resource
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