Dion, you are so totally uninformed.

Let's check out some of the publically posted information (AMA Web Site) from Brady Ware, Independent Auditors, Richmond, IN.
>>>>>>>
Board of Directors
The Academy of Model Aeronautics, Inc.
Muncie, Indiana

We have audited the accompanying statements of financial position of The Academy
of Model Aeronautics, Inc. as of December 31, 2006 and 2005, and the related
statements of activities and cash flows for the years then ended. These financial
statements are the responsibility of the management of The Academy of Model
Aeronautics, Inc. Our responsibility is to express an opinion on these financial
statements based upon our audits.
<<<<<<<<<<<

Direct quotes from the Audit Report as stated by Brady Ware and available for public review on the AMA Web site.

>>>>>>>>
Income Taxes - The Academy operates as a nonprofit organization and has received exempt status
under Section 501(c)(3) of the Internal Revenue Code. The Academy is, however, subject to unrelated
business income tax on magazine advertising, merchandise sales and rental income from debt financed
property. There was no unrelated business income tax expense for the years ended December 31, 2006
and 2005.

Advertising Expense - The advertising and promotional costs of the Marketing Division are expensed as
incurred. Total advertising and promotional costs, excluding those direct production costs related to the
sale of magazine advertising space, were $477,833 and $594,024 for the years ended December 31,
2006 and 2005, respectively.


2006
Model Aviation advertising .................$ 986,730
Model Aviation subscriptions ................ 72,575

Model Aviation magazine direct costs ( 2,010,268)


Salaries including contract services... $ 2,473,178 (Added: 10 persons paid for Model Aviation mag. efforts. Check staff AMA
website)

Fringe benefits and payroll taxes ..............648,498
<<<<<<<<<<<&lt ;

How much extra employee expense for a COMMERCIAL magazine exists that is NOT a part of the official accounted magazine expense?

How much damage is done to AMA's membership roster because the unfair business practices of a NON-TAXABLE organization produces a SUBSIDIZED COMMERCIAL magazine that is in competition with free-market media, which therefore will no longer support the AMA in free-market media's public distributions to the newsstands, etc. where AMA refuses to go? This ADDITIONAL COST to the AMA member most probably cannot be defined in reliable $$$ terms, but it does exist.

Now, in relation to the USPS item, since the published cost of $18 for the member's magazine subscription is in each MA magazine for "postal" considerations, what would happen if some Good Samaritan decided that in the interest of honest society, he should notify the US Postal Service Attorney General, that AMA has filed false documents for the purpose of securing lower mailing costs. [:-] Just a passing thought!

AMA IS a non-profit corporation under IRC 501 (c) (3). The magazine operation is considered an un related business. AMA is not subject to Federal Income Taxes. Portions of the magazine operation are. IMO, if MA was paying some $400,000 FIT each year, then over a million $$ of AMA funds would be available for other interests, perhaps subsidizing park-fliers.

Are you suggesting that that 2.4MM goes under the expense of MA's costs too? Those are employees of the AMA Hoss. And the AMA can do whatever they want within the legal limits of state, federal and tax law. Your beef is with the lawmakers and you are once again trying to defame the AMA at every single turn.

I dare you to do it. You are insinuating the AMA's lawyers, accountants, investment advisors, EC, certain AMA staff could be guilty of a Federal crime. Go ahead give it your best shot. How stupid do you think they are Hoss? If I were you I would find out the real requirements of USPS NFP discounts before you start calling AMA Federal thieves. Personally I don't know the information, but I'm SURE the USPS only request GROSS operating dollars for your publication because that's how Gov't agencies work. The net dollars are not shown till after the end of the fiscal year, so how on earth could the AMA ever present NET dollars to the USPS until the books are closed year after year?

Then I guess your beloved NRA is guilty of the same operation. EAA, AOPA and so forth. MA is not in the commercial market Hoss, MA is a membership publication. Again your beef is with the lawmakers that WROTE the unrelated business code which the AMA abides by LEGALLY.

I'm sorry Hoss, but that's it. No more communicating with you, I'm done. I'll give you the same red hand Muncie gave you a few months ago. You keep up your crusade to bring the AMA down, give it your best shot. You think I'm some kind of idiot, but I'm not Hoss. On one hand you claim to be the Saint of the AMA and on the other hand you are their worst enemy. You show no respect to the people whom you've claimed to be a crusader too.

Well Hoss I'll give you one more before I let you go.

Well Hoss, I was just informed that the USPS needs a copy and must have on file EACH year the same independent auditors report which we all see on the AMA's website to be eligible for the discount. Furthermore the financial statements, 501c3 tax status along with the application are reviewed by the USPS Pricing and Classification Service Center each and every year. Furthermore the PCSC makes the determination for discount based on the criteria of the application and the financial statements what you discount will be based on THEIR MATH, not yours.

Also the AMA qualifies for the discount by a longshot. Furthermore the publication can have as much as 75% advertisements which must be in line with the content of the publication and the members who receive the data. Meaning you can advertise McDonalds, but the bulk of the ads need to fit the shoe. Oh financial institutions ad are big no-no's and it's pretty easy to understand why. Furthermore the publication can be part of unrelated business under the umbrella of the NFP, but I'm sure you already figured that one out. And of course the AMA can charge whatever the market bears for advertising rates. So your theory of AMA keeping rates low doesn't come from the USPS . Of course there are dozens of other reasons why the AMA qualified for these rates, but that's information the AMA already knows, so we'll leave the t's and i's up to them.

So good luck with your whistle blowing, they already have the data. Unless you know of some kind of ... secret data??

Hoss,
so the nutshell version is

AMA tells the Post Office the cost to members is $18
AMA (executives with estimates) proves to members the cost to them is just $6 or $7
Folks quote STL jumping up & down the past month swearing that the member cost is $6
USPS requires a stated dollar amount for the value of the magazine given as member benefit...

...per DM's explanation earier in the thread... which I've been saying we could use some clarification and explanation from AMA reps or USPS reps.

Is that about the size of it?
This appears to be a discrepancy in the figure reporting.

even if we divide the gross expense by members we end up with
$2.4m / 155k = $15.5 ballpark, not $18 (dm & stl style)
or $2.186 / 161k = $13.5 ballpark, not $18 (2005 MA loss & 2005 membership from Historical thread)



<edit: oops, I had '2006' instead of 2005>

Wow, how did i miss this one? Sorry I'm still not talking to you, but this one I just can't let go, it's still part of previous discussion.

Hoss, federal income tax burden for the unrelated business is NET dollars, not gross. Based on the financial report the tax liability for MA is roughly $500.00, the minimum FIT for an entity that did not produce a profit. And if the payroll of the AMA employees was buried into the operating dollars of the unrelated business, the loss would be EVEN GREATER and the chance of a tax liability would be further. You DO NOT pay taxes on a business until that business makes money, except for the minimum amount which is now $500, and that's for a C corp, I'm not exactly sure what the burden is for a 501C3 unrelated, but it's certainly not going to be more then a C corp.

Where on earth did you come up with the conclusion that MA paid $400,000 in FIT's?

Well I received more information. Perks of working in NYC, lots of corporate lawyers in every building.

The USPS PCSC formulates what they call "Readership costs". These are all expenses depreciation, and similar items that are directly connected with the production and distribution of the readership content of the periodical for the upcoming fiscal year. Since the unrelated business is ATTACHED to the non-profit arm the PCSC takes into consideration all expenses from both arms of the NFP. Unrelated business is part of the not for profit operation. The unrelated business for tax purposes, has NO attachment with what the USPS decides to do for their discounting bases. These codes are written by lawmakers! Hoss is under the assumption that the AMA takes the laws into their own hand.

Oh and by the way the USPS PCSC has an entire classification of discounts just for this specific category because there are more then 2,000 non for profit entities that receive the exact same discount the AMA garnishes under the same class.

HUHHHH???? Is there a lawya in the house?

The saddest part of this whole torted tale is that the US Tax Code is so darn tangled that it does require a gaggle of lawyers to interpet it and decide what is and is not allowable.....

Jug,
It really is just 2 simple questions.

What numbers did they divide to get the $18 MA membership cost they tell USPS ?
How is that not what we tell Members the magazine costs them ?

without legal speculation by guys that legal speculated so well over the Paintball issue, or demanding everyone use the $6 figure they now dont want to use. Lets hear from the AMA, an AMA document, or the USPS instead.


<edit
oh, didnt see Doc get a post in, this aint a shot at you Doc, your observation is quite valid.>

Yeah Kid i got it. The point of my post is that so much of this crap is so over evrybody's head. Is it any wonder that there is not much participation from people in AMA politics. What i want to know is, What the heck are we going to do when we don't have Horrace to shine the light of day on this stuff?

No offense taken KE, I am used to getting ignored, I been married twenty years.....
Besides if the AMA needs some work in accounting, I will volunteer my wife, you would have no idea how much money "she saved me" last week when she went shopping with her sister..........she would have them in the black in no time.....LOL
Tommy

First off the AMA just doesn't spit out a number for the USPS. It's based on the financial records.

The number comes from all dollars associated to the costs of production. This includes receipts from both the unrelated business (which is MA magazine) AND any additional expenses provided by the AMA (which is the 501C3 a.ka. AMA). It's those combined dollars costs, plus expenses depreciated. So it does include both money spent directly, payroll provided by AMA, depreciated dollars and ANY other expense correlated to the combined contributed costs to produce MA.

There are perks of operating a not for profit company and those perks are unrelated business, which are tied together. The only time they are not tied together is for the taxman. But even then you can move dollars and cents within the legal limits. The AMA uses this perks, which some, well namely one person calls "unfair business practices" to produce a magazine for their membership based which comes out to a bottom line cost of about $7 per member per year. The AMA is not the only group to do this, this is textbook and it's called fairplay. Again, Hoss is mad at the lawmakers, blaming it on the AMA.

[link=http://pe.usps.gov/cpim/ftp/pubs/Pub417/Pub417.pdf]Enjoy.[/link] Don't tell me that you believe Hoss? You actually think the AMA is really that stupid. You will also read in the doc I just sent you what the crimes are for filing illegal docs.

Well maybe ol Hoss will have a shot at it next time.
Oh well

Hoss,
Keep taking that Geritol.

I did not. I never said anything near to your question. Where did you come up with the hallucination that I said such? Dion you work with kids. I'm confident that one of the 3rd graders will be happy to read the subject statement and explain it to you, however you will have to listen. I'm sorry that I write material that goes so far over your head. Unfortunatel my ladder goes up, and your ladder is obviously built for working below the surface, so ZOOOMMM, it all just goes right over your head.

Better keep those 3rd graders around, Dion. [>:] Your delusions of grandeur may have you looking at someone else's financial report. I posted the Auditor's actual report. Can you simply NOT read?
From Brady Ware Audit, AMA Web Site:
" Income Taxes - The Academy operates as a nonprofit organization and has received exempt status
under Section 501(c)(3) of the Internal Revenue Code. The Academy is, however, subject to unrelated
business income tax on magazine advertising, merchandise sales and rental income from debt financed
property. There was no unrelated business income tax expense for the years ended December 31, 2006
and 2005." <<<<

Son, you're in a bad way. I know the New York Doctors of Psychiatry definitely have their work cut out for them, however you may be allowed to cut in the line as surely they would appreciate the challenge.

Dion, you make such lovely promises and then go right out and break them. How could I ever trust you? [sm=sad_smile.gif]

One good point is that if I ever attend a party of people that read this forum, the first one to yell out "STL" will start the party with much laughter for the best joke of the night.

BTW, stl, my magazine choice from NRA, The First Freedom, has some advertising that I seldom pay attention to, runs about 60-65 pages and is full of what NRA is doing to serve me and keep me free to maintain firearms of numerous varieties, wear one on my person, and mostly all political and active happenings that I like to be informed about. I really do not care what it costs NRA because I see NRA doing a very good job to assist me plus some 100,000,000 freeloaders that have firearms but will not join NRA.

In addition NRA does NOT hide behind IRC 501 (c) (3) nor does the business end of your beloved EAA. Apples and oranges there so call in another 3rd grader. They know the differences in color, skin, and taste/texture. They will share that knowledge with you.

Hoss,
If the NRA was a 501(c) (3) it would not be able to make political statments even to its members. While some 501(c)(3) entities do some political stuff under the radar I do not think the NRA would even be able to doodle political stuff with out loosing its status as a 501(c)(3) and incuring fines etc.; if it was. I think the "NRA Foundation" is. Also "political" meaning is not as broad a term as what most of us would normaly think. It is different from issue advocacy and lobbying.

While I do not think how the NRA and EAA are run is really applicable to our organization, they have different challenges (problems in non PC talk); some of how they do it is of use. The AMA does not need the full political and lobbying effort of the NRA or has or should have the business end of the EAA (just think of how our hobby vendors feel now from what it does now).

Sorry I just caught the date of the first msg. I hate when people do that. Continuously going over the "record" leads to stagnation of ideas and just plain sillyness. It is one thing to hold one accoutable for their actions, but even in most criminal matters (not saying your well exprssed opinions are) there is a statute of limitations. For the "record" I am for a well run AMA magazine. I also would like lower dues, but would be willing to pay even more if there was more service by our AMA.

GZK-
this wasnt dug up to talk about the NRA
Some guy dug it up from thread history because I said the $6 figure was creative math of questionable numbers, and he brough this thread back from the grave to prove me wrong...... which of course blew up in his face as he now has condemned & abandoned the $6 I was right in not accepting elsewhere.

Since then I askes what numbers got divided to say to the post office MA costs us $18
(which nobody has shown the math to yet)
and why we tell the post office it costs us $18 but we tell the members it costs us $6/7/8.57

everything about the NRA is just smoke to avoid the real issue of MA Cost & Dues,
in this MA Cost & Dues thread

Thank You. gzkpez. I suppose my statement, "In addition NRA does NOT hide behind IRC 501 (c) (3) nor does the business end of your beloved EAA." could be construed as to the effect that NRA is not 501(c)(3) for some reason other than NRA is definitely a political action entity dedicated to preserving the individual personal freedoms of the citizens of this country.
I am well familiar with NRA organization even to the inside political battles within the organization itself. Yes, there are "some".
I donate to the NRA each year. Those donations are not deductible to gross taxable income. If they were you can bet I would find a way to do so.
As KE stated there are some among us here in this forum that will drag up whatever they can if they think they can twist or construe some advantage for their own uninformed self-serving interests. Happens in all walks of life -- so sadly.

NRA Foundation is 501 (c) (3)
Advocacy is OK as a supporting educational option. Lobbying is susceptible to degree and amounts.

Sorry but here we disagree. If part of AMA, as both NRA and EAA have, was not incorporated NFP, then AMA could lobby for governmental recognition and support of a number of things like Flying Facilities in National Parks, and other forms of recognition.
A foundation could then carry on with the sporting portion of aeromodeling. Dave Brown brought this up some years ago, and at that time, being a bit ignorant of the various organizations, I was opposed to it all. Upon further investigation I changed my mind as the advantages are there. Even if the advantages are not used, IMO, as many other items, it is better to have them and not need them than to need them and not have them. I do not support EAA in having a family run the entire NFP unit.

Horrace,


I do not think the AMA should ever support, oppose or even endorse a candidates for public office in elections (even to the limited extent the law allows for us as a membership 501(c)(3)); it should lobby at the agency level FAA, FCC, NPS, ACE, EPA and other appropriate federal and state agencies as required. I do not think, unless we already have a very sympatitic and powerful congressman we will never get any special laws passed, while that would be nice for us and our country There are even countries that would pay you and me to build fly and instruct in our sport/hobby. Our legeslative agenda is not that intense as our regulatory agenda this is different from the NRA. It is quite a bit different lobbying and testifying before a legislative body and an administrative body.

Not all not for profits entities are 501(c)(3) organizations, there are 501(c)(4)'s and others. What is political and what type of lobbying and political involvement the various types of not for profits can or can not do is described by publications, regulations and written opines of the FEC and IRS (hopefully they do not contradict) and is not always simple. In the past their staff, once you get the right person, have always been helpful to me when I need answers on these types of questions. Also what was 5 years ago maybe not the way it is today as far as the definitions of the relevant terms and what is permit able; such as changes in who may lobby that accured a half a dozen years or so ago. There are significant exclusions of various activity that are sometimes not apparent in a casual read of the regulations and guide books; but a good practicing attorney in the field would be able to sort them out, or once again a talk to the right person in the right agency.

A comparison of the advantageous of the various forms of entities and examples of them is of value. If my memory serves all of NRA was a not for profit of one type or another, at least I was told this in an interviews with their officers and documentations they provided a few years ago, but they may have changed in the intervening time; I remember writing a sentence or two on a report about it. Not all if not most NFP donations are deductable. Other organizations to look at would such as the Serra Club (nice magazine) and effective organization. There are a lot of 501(c)(3)'s and other NFAs that the AMA can be compared to one does not need to be a member of them and it would be preferable not to be a member of them to eliminate personal bias. What worked well at one time may not be what is needed now with the current set of laws and circumstances the AMA needs to adress and adhear to. I was told early on that ever tax law especially ones labeled "simplification" were really just full employment for accountants acts and attorney proliferation acts.

Kidepoxy,
I wonder if the amount the Post Office uses is some sort of valuation expense related not an actual net cost. When government accountants talk about cost, expense and value they have a very different meanings in various context (got to love it, well if you were a goverment accountant). The answer I believe is on the application the AMA gave to the Post Office and the proper reading of it. The completed application should be available from the Post Office under the Freedom of Information act, but a blank form may also have the answer. I am sure it is some formulic value such as the total cost of the publication/total circulation without consideration of Advertising income. There should be a simple reason for this apperent descrepency, once know it will not be a desrepency I guess.

I would not recommend messing around with the Post Office, I feel, which some would may find surprisingly, the Postal Investigators are on the top tier of the various Federal Law enforcement personal I have the pleasure to deal with over the years and the penalties for non-compliance pretty tuff Also as the AMA is a 501(c)(3) organization it is independently audited; typically a review of a large expense such as the mailing cost of a publication would at least be on the auditors working papers (they are required tor report any discrepancies with Federal Laws they find). This would of been done each time it was audited. For the above reasons I doubt if that it was done incorrectly. What it means if the value that the AMA put on it is important in setting the rate is something the Post Office knows not I unfortantetly.

A good accounting of our organization is a good thing., which is one reason in favour of it being one sole entity. The AMA will face may different challenges especially with the "Park Flyers" and its new "Park Pilots association" which will eventully change the face of our organization.

GZ, I've tried to relay that exact information for Hoss for a long time now. First off there are hardly any parks in this country that disallow flying RC. For every 1 that says no there are 20 that say yes. And why lobby for something that the MEMBERS must take the first step to develop. Great the AMA got a park to allow RC flying, now whose going to manage the field? Luckily the AMA just created a new program for the MEMBERS to take the first step of action other then going down to DC to fistfight over nothing.

And the information you gave to KidEpoxy, I provided to him as well with links to the USPS document on mailing discounts for NFP's. He's got some 63 pages of reading materials. But just about every word you said is accurate as you already know. I also posted $1000 reward to Hoss if he calls the USPS and they take action, in public. His excuse will be that he doesn't need the money.

Oh, this sounds like fun:

The averaged Cost to members is $8
The membership Value for the post office is $18
And the Expense to go from Family to Open is $28
(or from $1Youth to $15Youth With MA is $14)

I think I see your point.
But I still would like to see the formula that mathed out to $18.

What is your opinion of how much dues should go up for a $1 Youth that decides to add the magazine? Being that the averaged cost to magazine getting members is $8.57 (magazine $net / # magazines sent). I like that $8 figure because it doesnt require us to say $6 is being taken from all AMA members, including taking $6 from the $1 dues collected from Youth No Mag members. Folks that take $6 from a $1 check sent in are not my kind of math users.

Would we be ripping off the $1Youth if we charge them $15 for $1Youth + $8.57 Magazine?
How much should we charge the $1Youth if they want a magazine that cost recipients $8.57?

Better yet, Increase the Dues to $100.00 per year. Same price for all memberships, regardless of age, family status, or weight or speed of model. Make receiving the magazine the decision or the member. No change in Dues regardless of whether the magazine is wanted or not. End of the arguments. End of the different classes of membership. Those who remain members are all on the same page of the same book. Oh, lest I forget. MA does not operate in the Red any longer. Opting out would mean nothing to the bottom line. It's a win-win solution.

Bill, AMA 4720

No thanks Stick, I believe the Park Pilots WANT their own tier as much as you don't want them to have one. I don't think they want to be controlled any more than you obviously want to control them. There are very obvious reasons why this organization needs to be a 2 party system. If you can't see them you must be swimming in a river in Egypt. But the reasons are right here on this board every day and at the field it's not a whole lot better. Prolly lots of skid marks leaving many RC parking lots around this country.

Call us anything you want, but come Jan of 08, you can call me Mr. Park Pilot member.

Dion,

I won't have to call you anything. You won't be flying at the same place as do I. You won't be coming to fly at the same competitions as do I. You will cease to be a factor in the part of the hobby that I have chosen to enjoy. There will be a wedge driven more firmly between the different parts of the hobby, rather than binding them more closely together. Your chosen part of the hobby will have become more of a, "Toy factor", than a viable part of the Model Airplane experience. All to save a mere $18.00. I spend more than that every week on fuel to fly and to drive to one of the 3 fields at which I fly. Currently, I spend $363.00 per year to belong to the AMA, and to the 3 clubs. $18.00 represents a small percentage of that total. Exactly how much are you willing to lose, and how much BANG are you going to get for your few dollars? I hope that all this has been thought through. I suspect that it has not. By the way, exactly where is it that the new group expects to fly? The various municipalaties are accustomed to having the assurance that the insurance is in effect for a certain amount. How receptive will they be toward the allowance of flying model aircraft with a lesser amount of coverage? Will the mainstream club fields recognize the lower coverage? It may be true that AMA liability insurance is secondary, but it is all about perception. The City Governments see 2.5 mil. on one hand versus .5 mil. on the other. Being knee-jerk reactionists, as they mostly are, how will you overcome that objection? They may not actually have a higher exposure, but you have an uphill battle on your hands to present a convincing argument to them. Best of luck. See Ya.

Bill, AMA 4720

Dion,

I tried looking up the word, "Prolly", and can't seem to find it. The closest I could come to it was the word, probably.

The skid marks that I think will be in evidence will appear elsewhere, once the Park pilots realize what they have given up, and what they actually have left to enjoy. New BVD's sans skid marks won't cost $18.00 per pair, so maybe the damage control won't be so expensive.

Bill, AMa 4720