Cycle News - Archive Issues - 1970's

TAX LAW CHANGES AFFECT CLUBS By Robert O. Fee PART II In years past, 1nd1v1duals wa.nt1ng to form a social club and be exempt from taxation found the State of California fairly easy to deal with. When the club's Incorporation was complete, tax exemption came almost automatically. The fUlng and reporting requirements were so easy (almost non-extslant) and enforcement procedures so lax that most clubs promptly forgot their responslbillties. With no reminders from Sacramento and the usual turn-over of offlcers, it didn't take long before the current club offlcers assumed the club was not required to report their affairs. After all, they were exempt, accordlng to their books, non-profit; and above all no one was saying anyth1og. The new reporting requirements have already been discussed. In addition to those, the State 15 tightenlng th.e lnltial requirements for exemption. In 1969, the California Revenue and Ta'xation Code was amended to make all Corporations and unincorporated associations (that perform services, own land and/or borrow money - even though organized on a non-profit basl5) subject to taxation and requires them to me an appllcation for exemption to be exempt. The term "Corporation" 15 fairly clear-cut. If a cycle club has 1ocorporated, usually to take advantage of the llmlted llabillty protection, there 15 no doubt among the members - their's Is a corporation. The Association, however, 15 an unfamiliar term to most cycllsts. It has, though, a strict legal def1nltion. In very s1mple terms It Is a corporation that Isn't legally Incorporated. The most Imporlant factor deterplIng the status of an association Is the continuity of ute; i.e. The officers change, new members come, old members go, but the club continues to function In accordancj! to It's constitution and by-laws. The exception 15 a club or grouPs of Individuals who merely share expenses; perform no services; owns no land; borrow no money; and have no Income. Without the tax exemption, the Corporation 15 subject to the corporate tax rules and the association 15 treated as a 'partnerShIP. Proflt, or lack of It, 15 a factor only 10 the determInation of the club's tax exempt ellglbillty. The CalIfornia exemption appllcation, Form 3500, has been revlsed to conform closely to the Federal exemption appllcation. The FranchIse Tax Board 15 also adopting the IRS's deflnltlons relating to exempt organIzations. IRS loglc holds that any benefits to members such as furnished unIforms, 1os1gn1a, free admission to club sponsored tournaments, from tax exemption. They have also held that any Income from non-members Is Income from the general publlc and, with certaIn exceptions, make the club 10ellglble for tax exemption. Under the new rules, the articles (or other creating documents) must clearly set out a specIfIc and primary purpose for exemptions. The general powers and purposes of file new club must not contaln commercial poWers unrelated to the purposes of the organIzation and further, must llmit the general purposes and powers normally allowed a corporation to those 10 furtherance of the specIfic and primary purposes except to an Insubstantial degree. Bonanza Opens Recreafiona' Cenfers maldng such centers for their sales and service a natural complement to the rapid eXPanSion of the marketo According to CYCLE GUIDE Magazine, Bonanaza has zoomed 1oto the toP five In U.S. sales of powered two-wheelers. Their car- top boat that wUI put two skiers uP to 35 mph Is now on sale with their many modelS of hot new mlnlblkes, dune buggies and snowmoblles, and an all-terraIn vehIcle 15 currently on the· Bonanaza drawing boards. The whole range of these hIgh-performance recreational vehIcles 15 avallable for year-round sales at the new Bonanza Fun Products dealershIps. For further Information write Bonanza Industries, Incorporated, 1775 South First Street, San Jose, CalifornIa 95112. • T.~ INTO TN. WINN . . .•• CI..cLif TRIUMPB·BONDA·BSA RIDERS The Finest In Motorcycle Service 2040 S. Main St., santa Ana, Ca. Ph: (714) 540-0033 PERFORMANCE 8. MAYNARD ENTERPRISES S.nt. An. Social and recreational organizations must be operated for the enjoyment of members and supported primarily by dues, fees, and assessments paid by the members. Some organizations, such as motorcycle clubs, have one or two events a year where Income 15 received from the. general publlc. There cannot be any beneflt to the members from the Income. A Federal Revenue Rullng (68- 119) has held that a club continues to be entitled to exemption where It received Income from the general publlc and the net proceeds from such an event were distributed to a charitable organization. The new CalifornIa Rules now require a dedication clause 10 the club's articles stating that such proceeds shall be so paid over. In addition to the costs of Incorporation, The Franchlse Tax Board now charges a $10 appllcation fee. If the exemption 15 denied, that's tough _ There's no provlslons for refund. Clubs In the process of Incorporating should verlfY that their attorneys are fUlng the exemption appllcation. Clubs already Incorporated and desirIng exemption should retaIn a tax practitioner familiar with the tax procedures for exempt organizations. It 15 a very pecullar field where do-lt-yourseU attempts almost Invariably result In a denial. The concluding column of thIs series wUl discuss the woe created by the 1969 Federal Tax Reform Law and how It affects the operations of nearly every motorcycle club 10 the nation. Mulo Take. Overall AI Beaumonl By Wanda Roeseler BEAUMONT, CALIF. June 7, 1970 With a total of 105 riders and a temperature readlng to match, the racIng at the Bushmaster's M.C. Moto-X was really hot. The 100's were first. Gary Little on a Hodaka won with Mike Ruby second. In the second moto, Larry Roeseler led for two laps until he fell. Thl5 left Ste:ve Bebeck to take the wln. The third moto was won by Mike Ruby and Gary Little second, followed by Steve Bebeck. Larry Bird on a Yamaha was the fastest rider In the 125 class, w1nn1ng the first and third moto. He would have won the second also, except for a crash at the start. BrIan K1ng, on a Yamaha, took second 10 the first and thIrd moto and wtnnlng the second. The 250 class was a run away for Gary WhItehead on a Husky 10 all three motos. He was pushed by Terry Trachy though, who finished second. The Open class had two of the fastest moto-x stars 10 It, ~b Rlley and Tom Muto, both on Huskies. Bob Rlley won the first two motos only to go out completely In the fIfth lap of the third moto. David Hernandez, on a Matco, ran second 10 the flrst moto only to be passed by Tom Muto In the last lap to flnlsh third. This f10ishlng order was repeated 10 the second moto. With Bob RUey out In the third moto, Tom Muto took the wln. David Hern;mdez fell only to flnlsh 10 fourth place. Dale Teubner, on a IIusky, finl5hed thIrd to add to hIs two fourth place f1ol5hIngs In the first and second moto• The races were enjoyed by all and future events wlll be looked foward too. The fact that there were no rest rooms was regretted by many and It would be safer If spectators could park closer to the track, so as to avoid thIevery. (Results on page 22) MIKUNI ADJUSTABLE MAIN JETS AVAILABLE Three popular-size adjustable maIn jets for the M1kun1 carburetors are now avallable at Webco parts and accessory dealers throughout the United Sta.tes ~d Canada, It was announced today. The device Is a flne, precision 1ostrument that allows the extra fine tunlng on three models of Yamaha motorcycles and for the new Hodaka SuPer Ratmodel. It Is Ideal for trall or cross- country riders who wish to adjust their maIn jet for altitude changes. Spaclallnd Triumph - Honda R.palrs 0 Custom Racine 0 Enelnas Machin. Work 0 Matlssa Kits Cyl. Borlne 0 H.ad Portlne ........11 MIKE BURKE MOTORCYCLE SPECIALTIES 15178 Raym.r St. Van NU)'I, Cal. 91406 T.I.phon. (213) 780-0779 DESERT SET UP SCRAMBLES NEW!! ! MOTO-X PRODUCTS MOTORCYCLE COVERS ~ CZ POLYETHELENECOVER Contou red to fit any size motor· cycle. Protects against rain, dirt & grime. Available in small - up to 175cc, medium - up to 35Occ, and large, up to 75Occ. PR ICE: $6.95 ea. Foldlne Foot Ates Propstands (rldetd.. p) Raplac.mant Rur F.nd Alum. Skid Platas • •• -:-"j( ~e i; p~ S18.95 S 4.95 $10.95 $10.95 (imichrome SUddenly '~~'/$IIlnes Simichrome is 1/ . I honey CI • anl quick as a bunny OMPETlTlON Tub.Sl CHEMICALS Can S3.50 704 W.1s,hlngton A'IIf •. Iowa Falls, Iowa 50126 MAl CO . "Works' Flbarelass Front F.nd.r S 9.95 'Works' Flbarelass R.ar Fend.r. $ 8.95 Mlkunl Carbo Manifold (For bolt on Mllwnl) S 9.95 3 Gal. Tank S42.95 YAMAHA lIoto·X HI-Mount F.nd.r Alum. with Brae.s DTl Ahn. with Brae. ATl·CTl Flbarelass RIIr F.ndar DTl (sama as stock) DTl HI·Torqua Chambars CTl HI·Torqua Chambars ATl HI.Torqua Chamb.rs S15.95 $14.95 $14.95 S14.95 S39.95 S37.95 S34.95 Mall Chac:k or .....y Dnlar or C.D.D. to Maynar. Eeterprlsas 205 N. Harbor BhIII., $anb Ana, Calff. DELUXE \/,INYL COVER Available in beautiful white or avo· cado green colors. Heavy lined plas· tic withstands heat & cold. Also in small, medium & large sizes. PR ICE: $14.95 ea. S1.00 for handline Calif...sldants add 5% tax Quality since 1947 Dealer Inquiries Invited BALLARD MFG. CO. 1063 East 3rd Street, Pomona. California 91766 ~ r.J ~ r.J t3 :>.. U

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