Skip to main content

Posts

Special Topic: U.S. Olympic Champion Ben Peterson's Autobiography "Road to Gold"

Road to Gold , by Ben Peterson We are privileged to serve our client Ben Peterson and Camp of Champs, the wrestling ministry he founded   and directs. Ben wrestled for more than 16 years, coached on a collegiate level for 28  years, and has directed Camp of Champs for more than 40 years. We have read his autobiography and found Ben's dedication to the sport and his faith to be inspiring. If you are looking for a good story we highly recommend Ben's  Road to Gold. In Road to Gold , Ben shares the lessons he learned throughout his upbringing and how they led him to achieve Olympic victory. Ben states a key element of his youth was the consistency of his parents. He was encouraged to read the Bible every day from an early age, which he now describes as the most stabilizing habit in his life. Throughout his story Ben also emphasizes the importance of confidence, solid goals, hard work, and consistency. These qualities helped Ben throughout his life and wrestling career, from learni
Recent posts

Why record designated gifts to Equity instead of a Liability accounts?

Question:  Why wouldn't a contribution designated to a missionary be recorded as a Liability instead of an Equity Fund account as you suggest? Then when the money is sent to that missionary the entry would simply reduce the Liability account. Answer: Generally Accepted Accounting Principles (GAAP) states that donor designated gifts, including missions funds, are considered donor restricted funds. As restricted funds it is best practice to record designated gifts as equity accounts, which falls under GAAP standards. This is true regardless of whether the restriction is temporary or permanent. Temporarily restricted gifts are gifts given by the donor for a specific purpose or program or for use at a certain time. In a church, common temporarily restricted funds might include a missions fund, benevolence fund, building fund, and others. Permanently restricted contributions are gifts given by the donor to be permanently maintained, but the church may use any income that comes from the

Three QuickBooks Alternatives to Posting Designated Gifts

Question:  What is the best approach to recording the receipt and disbursement of designated gifts in QuickBooks? Answer: There are three ways we recommend tracking receipts and disbursements for designated gifts. Each of these alternatives will come to the same conclusion at year end on the Statement of Financial Position (aka, the "Balance Sheet"), showing the same beginning- and end-of-year balances.      1) The first approach is to post the receipts and disbursements of each designated fund throughout the year to a single equity account. The benefit of this is that you will always have a real-time balance of remaining funds. The total receipts and total disbursements can also be viewed on QuickBooks by creating a "Transactions by Account" report and view the total credits (receipts) and debits (disbursements) of the desired designated fund. An additional benefit is that no year-end closing entries need to be made, as everything is posted directly to the equity a

How to Establish a Written Accountable Reimbursement Plan

Question: Our church would like to set in place an accountable minister's expense reimbursement plan to reimburse our pastor for any professional expenses he incurs. What needs to be done establish an accountable plan? Answer: Under accountable plans, eligible ministry expenses reimbursed to employees are not taxable as income. To establish an accountable plan an employer must follow three rules. For a more extensive discussion of these rules and guidelines see our previous blog post linked below.      1) The expenses must be business related.     2) The expenses must be substantiated in a reasonable period.     3) The employee must return any excess reimbursement or allowance to the employer. Following these rules is enough to establish an accountable plan. However, while there is no requirement to have the plan in writing it may be wise to create a written plan to ensure that the guidelines and rules are followed. A recent article (Feb 2020) in the AICPA's Journal of Acco

Is Education Assistance to a Pastor Considered Taxable Income?

Question: The pastor of a small church is furthering his education while fulfilling his duties as a minister. He wishes to complete a master's degree to improve his knowledge and abilities as a Christian leader. If the church pays the university for its pastor's master's degree, is the benefit taxable income to him?  Answer: There are two options to be considered when answering this question. The IRS provides two avenues in which education benefits provided by the employer may be excluded from taxable income, each with separate requirements. The education assistance may be excluded from income if it qualifies as a working condition fringe benefit or is part of an educational assistance program. 1) Working Condition Fringe Benefit If education benefits meet certain requirements they may qualify as a working condition fringe benefit, and therefore be excluded from income.  IRS Publication 15-B (2020) describes the specific requirements that must be met for job-related educat

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

The Unseen Presence , by   Mel 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

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 w

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

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

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 re