Big Bear Valley Community Arts Theater Society

“Karen Rachels is the Founder and Executive Director of the organization. Since the organization could not secure financing on its own, Ms. Rachels purchased land and adjacent buildings for the sole benefit of the Community Arts Theater Society. She incurred a personal mortgage to finance the activities and donated 100% of her time to the projects. As per Board resolutions and a long-term lease, the organization paid her a fair market rent for the use of the property and has made significant Leasehold Improvements. The lease was a 10-year lease-purchase option, where, at the expiration of the lease-purchase-option, the organization was to purchase the land and adjacent buildings. General Explanation, continued.Due to a major decline in program service revenues and donations, the board had no choice but to terminate the lease and abandon the property to Ms. Rachels. Ms. Rachels has been forced to put the entire property on the market. Due to declining commercial market value, the Leasehold Improvements have added no value to the property.”

“Activity Scholarships Grantee Various Students Street Various City, State, Zip Big Bear City, CA 92314Relationship Students Amount 700”

“Description AmountDepreciation from 4562 8,298Program Expenses 18,853Advertising 154Taxes, Permits and Filing Fees 77Website 337Insurance 3,679Loss on Abandonment of Leasehld Imp 324,174Less Debt Forgiveness (91,735)The organization terminated its lease and ceased its operations as of October 31, 2017. In order to pay current debt, its volunteers and board members held a yard sale to sell items, which included costumes, equipment and stage props. Total gross revenues generated from this yard sale were $24,311, which were reported on line 5a of the 990-EZ. Upon abandonment of the lease, the organization abandoned leasehold improvements and fixtures with a Net Book Value of $324,174. It also abandoned remaining net debt to the principal officer (Karen Rachels) of $91,735, which she was forced to forgive. The net loss of $324,174, less forgiven debt of $91,735 is reported in Other Expenses, zeroing out the Net Fund Balances, and zeroing out the assets and liabilities.”

“Category Beginning of Year End of YearBuilding Loan 145,000 0”

“The Bear Valley Community Arts Theater Society produces several plays each year which directly relates to its exempt purpose. Concessions are sold by 100% volunteers at the plays for the convenience of attendees. In addition, advertising is published in the play programs, which is exempt because the plays are held only intermittantly and are not regularly carried on.”