Are TCA Dues Tax Deductable?

good question....LCCA also......joe

According to the IRS in Publication 526 and if you itemize...

From IRS Publication 526 re Charitable Contributions: Membership fees or dues. You may be able to deduct membership fees or dues you pay to a qualified organization. ... You can't deduct dues, fees, or assessments paid to country clubs and other social organizations.

The publication also states that dues paid to organizations from which you will benefit are not tax deductible. My guess is that even if TCA is a 501c-3 charitable organization, the dues are not tax deductible.

George

I've not done the good research George has above, but I have made a donation beyond dues for the last several years.

Same as other charitable organizations, TCA sends a letter documenting the donation for tax purposes. 

If dues themselves were tax deductible, it would stand to reason such a letter would be returned after you paid your dues, and that is not the case.

-Dave

Are you kidding.

CPA says......HELL NO on our annual TCA Dues being deductible.....but I like how you're thinking.

Now, if you donate some of your collection or make certain payments above and beyond your dues, that's another story.  For example, if you donated $100 to a new TCA building fund or donated some model trains to them.....those would be deductible.

As a side note, a LOT less people will be Itemizing going forward due to "tax reform".

eddie g posted:

Are you kidding.

I'm with you eddie g

Dave

There is one situation in which TCA dues are deductible.  That is if they are part of your business.  As required by the Internal Revenue Code, I file a schedule C for my business of buying, repairing and selling old toy trains.  My purpose in having TCA membership is to be able to take tables at meets and participate in TCA activities that help me in that business.  So I'm on solid legal ground in treating it as a business expense.  Looking at this from a business perspective, the social interactions are benefical as a source off publicity and knowledge acquisition.  

Actually I'm doing this because I love trains and I like fixing things, and I enjoy the long distance social interactions with people on this list and others.  But from a tax law perspective, the motivation for engaging in a business is not important.

Organizations will often include the phrase "A portion of your (payment) is tax-deductible" in their literature. The portion that is considered tax-deductible is the part that does not result in your receiving a benefit. If you go to a charitable event that costs $100 and the value of the dinner is $40, you may deduct $60 from your tax calculations. The benefits of TCA, among others, are the Quarterly and the Newsletter. I do not seem to recall any language in any TCA dues literature that mentions that any portion of the dues is tax-deductible.

Berkshire President posted:

CPA says......HELL NO on our annual TCA Dues being deductible.....but I like how you're thinking.

Now, if you donate some of your collection or make certain payments above and beyond your dues, that's another story.  For example, if you donated $100 to a new TCA building fund or donated some model trains to them.....those would be deductible.

As a side note, a LOT less people will be Itemizing going forward due to "tax reform".

Check with your tax advisor on the new law. At one point they were going to allow charitable deductions even if you don't itemize. I don't know how that will work, and it's probably dependent on how the IRS sets up the forms to some extent.

George

George S posted:

Berkshire President posted:

CPA says......HELL NO on our annual TCA Dues being deductible.....but I like how you're thinking.

Now, if you donate some of your collection or make certain payments above and beyond your dues, that's another story.  For example, if you donated $100 to a new TCA building fund or donated some model trains to them.....those would be deductible.

As a side note, a LOT less people will be Itemizing going forward due to "tax reform".

Check with your tax advisor on the new law. At one point they were going to allow charitable deductions even if you don't itemize. I don't know how that will work, and it's probably dependent on how the IRS sets up the forms to some extent.

George

I'm a CPA...who owns a Tax Practice.

Qualified 501(C)3 charitable contributions are still allowed......BUT the Standard Deduction will be greater in 2018.  You take the larger of your Itemized Deductions OR your Standard Deduction.

If the Standard Deduction in 2018 is 24K and you make 10K of Charitable Contributions....and have no other Itemized Deductions.....you wind up taking the Standard Deduction and the Charitable Contributions you made offered you no Tax Savings.

mlaughlinnyc posted:

Actually I'm doing this because I love trains and I like fixing things, and I enjoy the long distance social interactions with people on this list and others.  But from a tax law perspective,the motivation for engaging in a business is not important.

100% wrong.  A business has to be motivated to make a profit.

Doing things simply b/c you love doing them is a hobby.  This is a highly litigated area and the IRS has the odds stacked in their favor.

Your TCA dues are deductible under Section 121 of the Internal Revenue Code as an Ordinary and Necessary Expense of Doing Business, presumably b/c you are going to the shows to make money. 

Turn your Activity into a Hobby and they become extremely limited in terms of deducting them.

If the 501(C)(3) organization does not provide anything of value in exchange for the annual dues, then the dues can be deducted.  The organization should provide a letter explaining this.  If something of value is provided, then the letter should identify what portion of dues is a donation and may be deducted.

The TCA prints and distributes publications to the membership, plus other services, and does not provide a letter identifying a deductible portion, so I presume the dues are not deductible.

Your "donation", over and above "dues" is OK. You cannot deduct dues because you get something in return...in this case, a magazine, no charge for TCA museum visits, being able to attend the "full" York, discounts during York week (Choo-Choo Barn), etc. 

Joe Hohmann posted:

Your "donation", over and above "dues" is OK. You cannot deduct dues because you get something in return...in this case, a magazine, no charge for TCA museum visits, being able to attend the "full" York, discounts during York week (Choo-Choo Barn), etc. 

I believe you guys are focusing on the wrong part of the tax deductibility standard. The IRS has said that the "social interaction" alone is sufficient to be "getting something in return". That applies even if you choose not to take advantage of it. I believe they will classify TCA and LCCA as a social club. I wouldn't test them for the small benefit of deducting your dues. 

As others have said, making a donation to the TCA above and beyond your dues would be tax deductible in most cases.

George

It never ceases to amaze me the depth and breadth of conversations on the OGR forum.  Come for the trains, learn tax law!  What a fantastically broad array of people who participate on this forum and in our hobby.

Short answer:  under no circumstances are your basic TCA dues tax deductible.  I'm no tax attorney or CPA, but we have one who has spoken quite clearly.  There is absolutely no ambiguity about this.

I think those wjho oppose my deduction are missing a key point.  In any line of business, the expense of joining organizations that help promote sales is deductible.  I could with clear conscience swear on a witness stand that I pay to belong to TCA because it provides a marketing advantage for my business, and that my income would be less if I could not sell at TCA events.  That makes it clearly a cost related to the revenue.  If I had been a TCA member before I filed my first Schedule C, then there could be some ambiguity about it. 

Many years ago I had a consulting business dealing with railroads.  That it was also a hobby interest did not negate the fact that it was a business.  One of my daughters is a tax attorney dealing with businesses.  I think I'll run this by her - just for fun.

This is what you need to run by her....b/c it's wrong:

"But from a tax law perspective, the motivation for engaging in a business is not important."

Your business has to have a For Profit motive.  Dealers can indeed deduct their TCA dues....or at least a portion of them.  It's an Above the Line Deduction on your 1040's Schedule C, your Federal 1065, Federal 1120S, or whatever Form your entity has to file. 

This deduction does NOT show up the Federal Schedule A of a Dealer as a Charitable Contribution.  It's an Ordinary Deduction.

Regular TCA members....who are NOT engaged in a business....can not typically deduct their TCA Dues....as an Itemized Deduction or any where else. 

There's another rule that says Hobby Losses are only deductible to the extent of Hobby Income.....but that's another discussion.