MinistryCPA - Corey A. Pfaffe, CPA, LLC

Consider reading the entire Bible in 2015. You may have seen many alternative schedules. Here is a link to one on our website that Corey developed more than 30 years ago and has enjoyed using in most of those years. It concentrates your reading and thinking on one passage per day, alternates Old Testament and New Testament books, and avoids breaking up your New Testament reading into partial chapters.

Yesterday, the Internal Revenue Service issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.   Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be: 57.5 cents per mile for business miles driven, up from 56 cents in 2014 23 cents per mile driven for medical or moving purposes, down half a cent from 2014  14 cents per mile driven in service of charitable organizations The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law. Taxpayers always have the option of claiming deductions based on the actual costs of u...

It's that time of year when individuals and businesses are making year-end gifts to charity. In a recent email, the Internal Revenue Service reminded those individuals and businesses that several important tax law provisions have taken effect in recent years. Here are five topics that taxpayers should keep in mind:  Qualified Charities Before you give that year-end donation, make sure the charity is eligible. Only donations to eligible organizations are tax-deductible. Select Check , a searchable online tool available on IRS.gov, lists most organizations that are eligible to receive deductible contributions. In addition, churches and government agencies are eligible to receive deductible donations. That is true even if they are not listed in the tool's database. Year-end Gifts Contributions are deductible in the year made . Thus, donations charged to a credit card before the end of 2014 count for 2014, even if the credit card bill isn't paid until 2015. Also, checks cou...

Question: A church's minister has an immediate relative who has been suffering from ALS for the past six years. The church sponsored and organized an "Ice Bucket Challenge" for the relative. Originally, the thought was to raise $3,000-$5,000. The church intends to (1) transfer the funds to the facility that cares for the relative or other ALS charities and (2) report the funds as a bonus compensation to the minister. However, the church raised close to $30,000; now the tax situation has more serious consequences if the church calls it compensation to the minister. How should the church report these monies? Answer: We see three areas that could affect how to report this money: If the funds are simply going to an organization to support its general operations (not to pay a single patient's costs) or to other ALS charities, the transfer is from one Internal Revenue Code section 501(c)(3) organization to another. There is no tax consequence for the church...

It is our privilege to announce that our blog has been chosen as one of the 50 Best Accounting Blogs of 2014 by Accounting Degree Review. Accounting Degree Review ranks and reviews the best accounting degree programs in the country. As a helpful resource, they decided to provide their readers with the 50 Best Accounting Blogs of 2014 . MinistryCPA is mentioned in the "Profit and Non-Profit Businesses" section of the article. Our blog has seen substantial growth through the years, as we recently passed 200,000 page views . The mission of the blog has always remained the same: to answer questions given to us by ministers and others serving in Christian ministries who are advancing the gospel of Jesus Christ.

Question: At the end of each calendar year, a church has several members who make cash contributions to projects which the members have pledged to support in the upcoming year.  The church uses the modified cash basis of accounting. Believing that IRS regulations so require, the church's year end statement includes the donation even though it is designated for the next year.  For book purposes, can the church record the donation in a liability account as a "prepaid donation" rather than recognizing it as income in the year of receipt?  Answer: Taxpayers' donations are considered to be on a cash basis, so the understanding above is correct: the donor's year-end statement must include the donation even though it is designated for a project the church will emphasize in the next year.  If the church's financial statements are for internal purposes only (and they likely are since the modified-cash basis is not consistent with full-accrual GAAP accounting ...

Generally, contributions to an employee's 403(b) account are limited to the lesser of: the limit on annual additions, or the elective deferral limit The limit on elective deferrals - the most an employee can contribute to a 403(b) account of salary - is $17,500 in 2014. The elective deferral limit for 2015 will be $18,000.  Employees who are age 50+ at the end of the calendar year can also make catch-up contributions of $5,500 in 2014 and $6,000 in 2015 beyond the basic limit on elective deferrals. The limit on annual additions (the combination of all employer contributions and employee elective deferrals to all 403(b) accounts) generally is the lesser of: $52,000 for 2014 ($53,000 for 2015), or 100% of includible compensation for the employee's most recent year of service.  Generally, includible compensation is the amount of taxable wages and benefits the employee received in the employee's most recent full year of service. If you 403(b) plan doesn't li...

Question: Our non-profit organization (NPO) participates in the Amazon affiliate program . We offer books on our website specifically related to our organization's exempt purpose. In addition, we also provide a link for individuals to purchase other non-related items from the Amazon website.  Are there any tax considerations our NPO needs to be aware of? Answer: There are three conditions that must be met in order for certain income producing activities to be taxed as Unrelated Business Tax Income (UBTI). Those three conditions that determine if an activity generates unrelated business income (UBI) are the following: Is the activity a trade or business? Is the activity regularly carried on? Is the activity not substantially related to the exempt purpose? If the answer is yes to each of the above conditions, it is likely the income producing activity is subject to UBTI, as defined under Internal Revenue Code Sections 512 and 513. We are familiar with a couple ways of...

Yesterday, the Chicago-based 7th Court of Appeals rejected a case brought by the Freedom From Religion Foundation (FFRF) that would have declared tax-exempt housing allowances unconstitutional. The court overturned a previous ruling in favor of FFRF by claiming that FFRF lacked "standing" because the law did not affect them.  Had the court of appeals upheld the previous ruling, thousands of clergy would have been affected by an increase in income taxes. This news comes as an encouragement to us at MinistryCPA and to the clients we serve. Although FFRF vows to appeal their case to the Supreme Court, the court of appeal's decision sets a strong precedence in favor of clergy.

Question: I am a minister and I have lived in a parsonage for 40 years. I hope to retire soon and travel around as a non-paid volunteer to assist small churches in rural areas.  I am considering buying a motorhome (or RV). Can a motorhome qualify as a principal place of residence? Answer: Many individuals who own a motorhome ask this similar question: "Can my motorhome count as my second home?" The reason people ask this question is because there are tax benefits to claiming a motorhome as a second (or only) home. For example, the interest on a loan for the motorhome can qualify as a tax deduction, and an individual may be able to deduct a portion of the sales tax paid on a new motorhome. Also, some states allow a portion of the RV's vehicle registration to be deducted.  There are a few basic requirements that must be met to claim a motorhome as a second (or only) home. For example, it must have on-board permanently mounted sleeping, eating, and bathroom facilit...