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About Danzo

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  1. we are in oregon and we are meeting two hours in person, Mask usage pretty strictly enforced for the two hour meetings, the youth activities, not so much and the smaller meetings (ward counsel, missionary coordination, etc) not as much. Interestingly enough, the last sacrament meeting, there was one person who wasn't wearing a mask who was the oldest person in attendenc (90 years old, I think) No one kicked him out.
  2. I specialize in taxes as well, EA and admitted to the US Tax court Bar. I guess we are both crazy to be paying attention to these message boards at this time of year. Good thing they gave us an extra month this year.
  3. Just so we are speaking accurately here, Currently the church and churches are not required to pay income Tax on their exempt purpose revenues. They are required to pay 1. payroll taxes 2. UBIT (unrelated buisness income tax) on unrelated business income Some property and purchase may be subject to sales tax and property taxes (It depends on the jurisdiction and the particular sales and property involved) I am sure the church pays out a lot of payroll taxes. I have had to deal with clients who are not profit organization and churches who have owed q
  4. Of course they are different than for profits. In fact they are not even called P&Ls Here is an example for the american red cross a non profit https://www.redcross.org/content/dam/redcross/about-us/publications/2019-publications/2019_AmericanRedCross_Financial_Statements.pdf You wont find the term "Profit" at all on any of the Consolidate statement You come up with a "Profit" if you want to compare changes in net fund balances. Compare with general motors, a for profit company https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_GM_2019.pdf (page 50
  5. Although I don't have time to completely review all tax law cases, we can at least start with the supreme court decision in Thor Power Tool v. Commissioner, 439 U.S. 522 (1979) "There is no presumption that an inventory practice conformable to "generally accepted accounting principles" is valid for tax purposes. Such a presumption is insupportable m light of the statute, this Court's past decisions, and the differing objectives of tax and financial accounting." You are right, that GAAP can be used as a starting point, but the tax code often requires deviation. I am sure you
  6. The way I see it is when the church says no tithing funds were used for project X 1. The church is telling the truth. The only way that would be possible is if the church uses a funds based accounting system 2. The church is lying. The only way they could be lying is if they used a funds based accounting system and they knew that tithing funds were used for the project. 3. The church doesn't use a funds based accounting system. Then the church really has no idea whether the funds come from tithing or they found the money on the street one day. They just say stuff l
  7. I am well aware of what happens in the practical world. In the past, I have made a lot of money designing custom software with custom accounting systems to fit the needs of the organization that are not the same accounting methods that are used by GAAP or Tax or even other software systems. While these methods are required for reporting to the public and various outside agencies they are often less than useful for managing the organizations day to day needs. Hence the need for customization. While I am no longer in the the software business, I still make quite a bit of money consulting wi
  8. The reporting requirements should be set by the needs of the organization. These financial statements are then manipulated for reporting to various outside parties (government). It should never be the reverse. After as has been stated in many a tax court case GAAP is not an acceptable method of accounting for tax. That doesn't mean GAAP should not be used, it just means the GAAP reports need to be manipulated for tax purposes. Even GAAP is often a manipulation of accounting systems that are non GAAP but much more useful to the organization's internal needs.
  9. We will have to just agree to disagree. If the church didn't use a funds based accounting system, the church couldn't even know whether tithing funds were used for one project or another, much less lie about it. The statement as it currently reads "Though reasonable efforts will be made to use donations as designated, all donations become the Church's property and will be used at the Church's sole discretion to further the Church's overall mission." Woudl not make any sense if they were not trying to segregate income by funds. No reasonable efforts could be made if there weren't a
  10. IF the Church uses a funds based accounting system to segregate funds by income source, then It can say whether or not tithing funds were used for a specific project. Its used all of the time and is a normal form of accounting in non profits and government organization. People get in trouble all the time in government for using money from the wrong source for the wrong project. We just had a scandal in one of the small towns in our area when the local government tried to use sewer funds (income from a sewer fee) for roads. These accountings systems are taken seriously.
  11. Although many organizations cheat and us a simple p&L and balance sheat (especially the small ones) because they don't really know what they are doing, it really isn't appropriate for a non profit to use the P&L format for their financials. The 990 is really not built around a P&L format. You really have to manipulate the books to make it fit. The reason why the I belive the church uses funds based accounting is that almost every thing that I have seen in the church revolves around "funds". Tithing funds, Fast offering Funds, Humanitarian Funds, Building Funds, Mission Fun
  12. I can't see how they wouldn't use a funds based accounting. Its pretty much the standard for non profits of that size.
  13. I don't think you have much of an idea of funds based accounting. In funds based accounting (the accounting used by governments and non profits) money is not fungible. The government can't used the street maintainence funds to pay for the library. The funds are segregated and restricted to specific uses, based on their source. Gas tax can only be used for highway improvements, for example. Most non profits use a funds based accounting system, rather than a profit and loss based accounting system.
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