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Special Topic: Mel Goebel's "The Unseen Presence"

The Unseen Presence,byMel Goebel We are privileged to serve our client Mel Goebel and the ministry he recently founded--Life Relaunch. We have read his autobiography and found it to be both encouraging and challenging. If you take the opportunity to read his story, we believe you'll be thankful that you did. The Unseen Presence is a moving story of Mel Goebel's troubled upbringing and how Christ rescued him. Mel became involved in drugs and alcohol at an early age, and found himself in prison at 20 years old. The turning point in Mel's life was when he met another prisoner whom he referred to as a "Jesus freak." After skeptically questioning this "Jesus freak," Mel was challenged to read the Bible himself. Through reading a Bible borrowed from a chaplain he learned of salvation, and turned to Christ.The Unseen Presence describes the ministry God provided Mel after his salvation. Having a burden for other prisoners Mel began to work with Prison Fellowship…
Recent posts

Missionary Training--Tax on Travel Reimbursement

Question: A church member wishes to become a missionary, and will spend the next six months training out of state. His church wants to pay for both his training and his living expenses (e.g., food, travel expenses, etc.) during that time so he can stay fully committed to his training. Is this support considered taxable income?Answer:In this situation, the individual in training is considered either an employee or an independent contractor of the church because he is being compensated for helping the church fulfill one of its responsibilities, the Great Commission. It may turn out, though, that he will end up with little taxable income.In determining whether the expenses paid by the church are considered taxable income, it is important to identify whether the individual's assignment is temporary or indefinite. The IRS provides a couple key indicators in determining the correct assignment. The first indicator considers the amount of time spent away from one's main place of work. …

Unsolicited Church Contributions Designated to Missionary

Question: A church supports a missionary with a generous monthly disbursement to his mission agency. This regular monthly amount is disbursed from its general fund as a budgeted expenditure. A donor has made a contribution earmarking the same missionary with a designated gift. The church has not solicited or maintained a designated fund for this missionary. What alternatives might the church consider to handle the contribution?Answer: A church may apply one of two alternative policies to handle unsolicited designated contributions. 1.) While every missionary family could certainly put additional funds to good use, the first alternative implies the assumption that the current monthly amount from the church provides a very minimal or insufficient amount to support his or her work. Hence, additional support enabled by designated gifts will be most welcome, encouraged, and solicited. Because the designated gifts are above and beyond the budgeted amount, a separate designated fund must be cr…

Treatment of Funds Raised for Cancelled Missions Trip

Question: Church members were planning to participate in a church-sponsored mission trip, and the participants have raised funds from various donors. Unfortunately, due to COVID-19 the trip was cancelled, and the church disbursed to the participants the funds that had been raised. Should a Form 1099 be filed for any amount refunded in excess of $600?Answer:
While the COVID-19 pandemic may be a rare occurrence, it is not uncommon for individual members to find it necessary to cancel their participation. When members cancel their participation for any reason, including the scenario described above, there are two ways we recommend the church handle the funds raised for the mission trip. The first is that the funds be returned to the original donors. Because the donors had provided their gifts for specific individuals to attend the trip, which is no longer taking place, the funds could be refunded to the donors. The second option is to place the monies in a designated fund for future missi…

May a Benevolent (Non-Taxable) Gift Be Given to a Guest Speaker?

Question: 

A church had a guest speaker fill the pulpit twice during the span of the year. For those two times, the speaker received a total of $1,000 in honorarium ($500 per Sunday). The church issued him a Form 1099-NEC for that amount. 
However, during the course of the year the speaker and his wife encountered substantial hardship. Is it permissible that the church choose to offer assistance to the speaker from its benevolent fund? Will a gift of this nature be taxable income to him?
Answer:

To determine whether the gift is considered taxable income in this case, let's consider the following.
1) The nature of the gift.     The nature of the gift should be entirely benevolent. If the gift is given to supplement the less than fair value amount paid to the speaker for his services, or with the expectation he will speak again in the future, the gift is considered income and is taxable to the individual. Benevolent disbursements are not considered taxable income to the recipient as long …

Treatment of Online Giving and Processing Fees

Question: How should a church record online donations in the following situations? Additionally, what amount is the donor allowed to deduct as a charitable contribution?1.) The processing fee is deducted from the donor's gift. 2.) The donor pays the additional processing fee.  Answer:1.) The processing fee is deducted from the donor's gift.    For example, an individual gives $100 to the church and the payment processing company charges a $3 processing fee. The church will receive the net amount of $97. We recommend that the church record the full amount of the gift, $100. The church will then record an expense to account for the $3 processing fee. The donor receipt will reflect the gross amount ($100), which is the amount deductible to the donor as a charitable contribution.2.) The donor pays the additional processing fee.              In this case, the donor donates $100 to the church and pays the $3 processing fee. The church should simply record the $100 donation in this s…

Posting designated gift contributions to equity accounts

Question: 
Why is it best to credit donor designated contributions to Designated Fund Equity accounts rather than Income accounts, as you propose in your recent post? ("Debits and Credits for Designated Gifts")

Answer: 

In most cases, the Income accounts in QuickBooks relate to the receipt of General Fund contributions. At the end of each fiscal year, those Income accounts close into the balance sheet General Fund account. The same process is followed regarding General Fund expenses.

The effect of posting designated gifts and disbursements to Income and Expense accounts which are closed into the General fund balance combines them with all other financial transactions thus zeroing out any remaining unexpended designated gift amounts.

Some ministries have avoided this by keeping a second set of records, which is unnecessary in our opinion. A charitable organization will naturally want to maintain its Designated Fund balances which will carry over from one year to the next when p…

QuickBooks Classes for Church Ministries

Question: 
A not-for-profit organization wants to establish two ministries with similar but independent operations, for example, a men’s ministry and a women’s ministry. It wishes to prepare and implement a budget for each ministry and wants the ability to create reports for each ministry. Ultimately, it wants any excess or deficiency of receipts compared to disbursements for a given year to be “remembered” as the ministry continues year upon year.

Additionally, donors are occasionally solicited to contribute to short-term special projects with the promise that their donations will be spent only for that temporary project. For example, perhaps the women's ministry wishes to received designated contributions toward a one-time equipment purchase.

How might an organization accomplish these multiple objectives: 1) tracking men's and women's ministry general fund balances year-on-year, and 2) tracking special projects' receipts and disbursements? 
Answer:

Before addressing th…

QuickBooks Reports of Designated Fund Activity

Question:The following question rolls out of content provided in a previous post: "Debits and Credits for Designated Gifts."How do I generate a report in QuickBooks that shows the monthly starting balance, change for the month, and the ending balance for each Equity account relating to Designated Gifts? Answer:Our answer here will be consistent with the above cited blog post. In it we discussed simplest approach to handling Designated Funds that we can suggest. We will illustrate assuming the use ofQuickBooks Desktop. Some of these instructions may be slightly modified for users of QuickBooks Online.The following are the necessary steps:1. Select the "Reports" pull-down menu 2. Under "Accountant & Taxes" choose "Trial Balance" 3. Modify the date range to reflect the desired period 4. Double-click on the amount for the Equity account of interest This will generate a "Transactions by Account" report.

Mullen's Dairy Bar - A Business, a Pandemic and the Journey

On March 23, 2020, a governmental order was given to close all “non-essential” businesses due to the coronavirus outbreak.These words fell heavy upon the community and left the hearts and minds of every business owner questioning who was considered essential and what does an essential business look like during a pandemic?

Mullen’s Dairy Bar, in Watertown, Wisconsin was such a business.We asked Adam Keepman, operator and chef of Mullen’s, to share his journey with us and how Mullen’s has changed through COVID-19.

As we spoke with Adam over lunch, he looked pleasantly comfortable with all the busyness surrounding us. Our first question addressed the “most challenging obstacle” during the pandemic. “Was it customers, vendors or possibly finances?” we asked. His answer matched the initial reaction for many of us.“My biggest obstacle was myself, keeping cool, being positive and productive. I had to be able to look at the situation with a clear head. I also spoke with my staff, making sure ev…