1.        Identify ECFA (Busby, 18, 28-29).

2.        State the recommended minimum frequency for the meeting of governing boards (Busby 18-19).

3.        Explain the ECFA requirements for governing boards and their members (Busby, 18-19).

4.        Describe how minutes should be kept for governing boards (Busby, 19).

5.        State the ECFA requirements for an annual audit and financial statements (Busby 19).

6.        Detail what should be involved in an annual compensation review (Busby, 19-20).

7.        Identify who is normally responsible for budgetary enforcement and reporting (Busby, 20).

8.        Distinguish between a “conflict of interest” and “related-party transactions” (Busby, 20-21).

9.        Describe a “Conflict or Duality of Interest Policy Statement” (Busby 20-22).

10.     Describe the proprieties in compensating board members (Busby 24-25).

11.     List the seven things that should be communicated to a prospective donor (Busby, 25-26).

12.     List four problems that may arise when a church accepts restricted gifts (Busby, 27, 30).

13.     Identify what ECFA considers appropriate for a non-profit organization to accumulate in unrestricted operating funds (Busby, 30).

14.     Detail the reporting requirement for “incentives” and “premiums” (Busby, 31).

15.     Summarize the type of reporting to donors that ECFA requires of its members (Busby, 31).

16.     Elaborate on the appropriateness of compensating gift planners (in and out of the organization) (Busby, 31).

17.     State when it is and when it is not appropriate for a church to accept a gift designated for a specific individual (Busby, 31-32).

18.     Explain when the reception of royalties by an officer of an organization is and when it is not acceptable (Busby, 32).

19.     State whose responsibility it is to assign the market value on donated property (Busby, 32).

20.     Explain what it means to act in the interest of the donor (Busby, 32).

21.     List the four key concepts from chapter one (Busby, 32).

22.     Differentiate between “nonprofit organization” and “tax exempt organizations” (Busby, 33).

23.     List the 14 criteria used by the IRS to determine whether a religious organization qualifies as a “church” (Busby, 35-36).

24.     List nine possible advantages charitable organization enjoy (Busby, 34).

25.     List five strict requirements for tax-exempt organizations (Busby, 34-35).

26.     Fully identify the Employer Identification Number (EIN) and the form used to apply for the number (Busby, 37-38).

27.     Detail when it is appropriate for a local church to apply for IRS tax-exempt status (Busby, 37, 39).

28.     Explain why the typical Assemblies of God church will not need to apply for IRS tax-exempt status (Busby, 40).

29.     Define “Unrelated Business Income” (Busby, 40-41).

30.     Important: Carefully and fully state when a church must file Form 990-T (Busby, 41, 48).

31.     Explain who the IRS would define “regularly carried on” (Busby, 41, 43).

32.     Explain how the IRS would define “substantially related” (Busby, 43).

33.     State when a church tour would be exempt from UBI (Busby, 43).

34.     Give three examples of when rental income would not be considered UBI (Busby, 43).

35.     State the purpose of the debt-financed income tax (Busby, 45).

36.     List six activities or sources of income that are not generally considered UBI (Busby, 45-46).

37.     Define “private benefit” and “private inurement” (Busby, 47).

38.     Recognize three examples of “private inurement” and one example of how it may be avoided (Busby, 49).

39.     Explain when a church must notify the IRS of its change in fiscal years (Busby, 53).

40.     State the purpose of Form 5578 (Busby, 53).

41.     State a church’s obligations related to “property taxes” (Busby, 56).

42.     State a church’s obligations related to “sales taxes” (Busby, 56-57).

43.     State a church’s obligations related to “municipal service fees” (Busby, 57).

44.     List eleven things a church should do to avoid violating the political campaign provisions of the law (Busby, 57-58).

45.     State the risk in “excessive compensation” (Busby, 59).

46.     Give the basis for reasonable compensation (Busby, 59).

47.     Give the criteria that must be met before the “fair rental value” of housing provided for a non-minister employee need not be reported as compensation on For W-2 and is not subject to withholding (Busby, 60).

48.     Important: Fully explain the “minister’s housing allowance” (Busby, 60-63).

49.     Summarize the provisions of a 403 (b) plan (Busby, 65).

50.     Describe each of the following “fringe benefits”:

a.        Personal use of employer-provided vehicle (Busby, 68-70).

b.       Value of personal vehicle use for business purposes (Busby, 68-70).

c.        Employer-provided independent care assistance (Busby, 71).

d.       Medical expense reimbursement (Busby, 71-74).

e.        Compensation-related loans (Busby, 74-75).

f.         Social security tax reimbursement (Busby, 75).

g.       Property transfers (Busby, 75-76).

h.       Moving expenses (Busby, 76).

i.         Non-accountable expense reimbursement (Busby, 78).

j.         Gifts (Busby, 77).

51.     Contrast a “nondiscriminatory” and a “discriminatory” fringe benefit plan (Busby, 77).

52.     Important: Fully explain the “Accountable Expense Reimbursement Plan” (Busby, 78-80).

53.     Recite 1 Timothy 6:6-10 in the NIV:  ^“But godliness with contentment is great gain.  For we brought nothing into the world, and we can take nothing out of it.  But if we have food and clothing, we will be content with that.  People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction.  For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.”

.Unit 2 – Feb. 7-March 2 - Accounting, Bookkeeping & Reporting.

In unit two, we will be examining the principals and procedures involved in accounting.

Unit Two Assignments:

1.        During unit two, the student shall take detailed notes over class lectures. 

2.        He or she shall also be required to read pages 81-204 of Daniel Busby’s The Zondervan Church and Nonprofit Organization Tax and Financial Guide.

3.       Explore the following web sites:

a.        QuickBooks http://www.QuickBooks.com/

b.       Peachtree http://www.peachtree.com/

c.        Accounting Aide http://www.accountingaide.com/

d.       Bookkeeper List http://www.bookkeeperlist.com/usa_tips.shtml

e.        CPA Journal http://www.cpajournal.com/

5.         Exam #2 (25%):   Successfully, complete an objective exam.  The exam is scheduled for Thursday, March 2.  It will cover all class notes through Tuesday, February 28, the articles specified above, the reading of pages 81-204 of The Zondervan Church and Nonprofit Organization Tax and Financial Guide, and the memorization of 2 Corinthians 9:6-13.  Memorization will be tested by means of a matching section.  The memorization will take some doing.  It is recommended that the student write the verses on 3 x 5 cards and drill them whenever there is a spare minute.  The textbook is filled with many words and concepts that are new to most CBC students.  To do well on the exam, the student must keep up with the reading.  The exam will have questions inquiring whether the textbook pages have been read or not.  Important: The exam will draw heavily from the learning objectives below.

Unit 2 Learning Objectives.  The student should be able to:

1.        Give the employers responsibilities for “employees” (Busby, 82)

2.        List the common law rules or requirements that must be met to classify a work as an “employee” (Busby, 83)

3.        Give the responsibilities assumed by a worker if he is classified an “independent contractor” (Busby, 82-83)

4.        List the requirements that must be met before a worker can be classified an “independent contractor” (Busby, 82)

5.        State the key issue in classifying a church worker as an employee or an independent contractor (Busby, 82)

6.        Explain how a minister may be classified as both an employee and as self-employed (Busby, 84-85)

7.        List the six special tax provisions for ministers (Busby, 84)

8.        State whether the IRS distinguishes between “licensed” and “ordained” in its treatment of ministers (Busby, 84).

9.        List the tests the IRS applies in determining whether a person qualifies to receive the six special tax provisions as a minister (Busby, 63, 84).

10.     List the roles a person may fill (other than pastor of a local church) and still qualify as a minister (Busby, 84-85).

11.     Carefully distinguish between the payroll tax or compensation reporting requirements for each of the following:

a.        Minister-Employees (Busby, 85).

b.       Non-minister-Employees (Busby, 85).

c.        Self-employed Ministers and other independent contractors (Busby, 85).

12.     List the employee and employer’s 2003 tax rate for each of the following:

a.        Social security wage base of up to $84,900.00 (Busby, 86).

b.       Medicare wage base of up to $84,900.00 (Busby, 86).

13.     Specify the annual wage level that is not subject to FICA (Busby, 86).

14.     State the three types of services, which are excluded from FICA payroll tax withholding (Busby, 86).

15.     Explain who is qualified to file Form 8274 (Busby, 86).

16.     State the requirements of churches regarding withholding and paying income taxes (Busby, 87).

17.     State the exception to the above rule (Busby, 87).

18.     Important: Explain the employee-minister’s voluntary withholding agreement with a church (Busby, 87).

19.     Important: Describe how a self-employed minister reports and pays his income taxes (Busby, 87).

20.     Specify the purpose of Form W-4 (Busby, 87).

21.     Specify the purpose of Form W-5 (Busby, 87).

22.     Important: State the withholding requirements for SECA (self-employment taxes) (Busby, 87).

23.     Important: Carefully describe how a minister-employee with a voluntary withholding agreement may have sufficient tax withheld to cover his self-employment tax liability (Busby, 75, 87).

24.     Important: Fully identify those who may be liable if payroll taxes are not withheld and paid to the IRS (Busby, 89).

25.     Distinguish between the three levels of due dates for depositing withheld payroll taxes (Busby, 89-90).

26.     Explain the potential costs to an organization for missing deadlines for depositing withheld payroll taxes (Busby, 89-90).

27.     State the purpose of Form 8190 (Busby, 90).

28.     State the deadline for distributing Form W-2s to employees (Busby, 94).

29.     Important: List the items that should be reported in Box 1 of the Form W-2 (Busby, 94).

30.     Important: State what should not be reported in Box 1 of the Form W-2 (Busby, 95).

31.     Explain where payments made to a minister under an accountable expense reimbursement plan should be reported (Busby, 95).

32.     State what should be placed on the minister-employee’s Form W-2 under the heading “social security tax withheld” (Box 6) and “Medicare tax withheld” (Box 6) (Busby, 97).

33.     List the situations that would necessitate the use of Box 13 (Busby, 99).

34.     Explain where payments made to a minister under a non-accountable expense reimbursement plan should be reported (Busby, 98).

35.     State the purpose of FUTA and explain how churches are obligated by this act (Busby, 101-102).

36.     Explain the purpose of each of the following forms:

a.        Form 1098 (Busby, 105).

b.       Form 1099-INIT (Busby, 105-107).

c.        Form 1099-MISC (Busby, 108-109).  Important!

37.     Explain why counters should be asked to sign a statement of confidentiality (Busby, 116).

38.     State the minimum number of people who should be involved in the counting process (Busby, 116).

39.     Name who should not be involved in the counting process (Busby, 116).

40.     Explain why the use of offering envelopes should be encouraged (Busby, 117).

41.     Describe “restrictive endorsement for checks” (Busby, 118).

42.     State what should never be used to pay cash expenses (Busby, 120).

43.     State what should never be signed in advance (Busby, 120).

44.     Identify the person who should not have access to the checking account (Busby, 120).