For example, if a club is looking to acquire a ,000 aircraft and has a cap of 20 members, each member would buy an equity share in the aircraft at ,000.
The structure of a corporation mirrors the IRS’s tax-exempt requirements making it the most commonly accepted tax-exempt entity.
A non-equity club is one in which the club, as an entity, either leases or owns the aircraft.
The members don’t have a financial right to a portion of the asset if the aircraft is sold or the club is dissolved.
Clubs should carefully consider the advantages and disadvantages of incorporating (corporation), forming a limited liability company (LLC), or becoming an unincorporated association.
Requirements for corporations and LLCs vary from state to state.
For example, a club collecting money for a reserve fund is likely to have revenue that exceeds expenses, and taxes would be due on the net profit.