Olms interpretative Manual

CONTENTS OF ANNUAL REPORT:OTHER DISBURSEMENTS

214.801LMRDA,SECTION201(b)(6)

...other disbursementsmadebyitincludingthepurposesthereof;...

SeeManualEntries512ff.,PROPRIETYOFEXPENDITURES.
214.805See Instructionsfor LM-3,Items 45-55.InstructionstoLM-2,Items50-68.214.806DISBURSEMENTSFOROTHERPURPOSES(LM-2,ITEM53)
There is nothing in the Act which would tend to prevent a labor organization from voting tospend money to arrange or help to arrange a picnic for its members, nor any provision denying toa union the right to divide its treasury or a share thereof among its members.Such expendituresand disbursements would be among the items to be reported by the organization in its annualreport.In making disbursements from a union treasury, the Act specified that those should bemade in accordance with the constitution and bylaws of the organization and with the applicableresolutions ofits governing body, if any.

(Revised:Dec.2016)

214.810USEOFUNIONAUTOMOBILE

Whena unionofficerisfurnishedacar bytheunionwhichisusedpartiallyforhisownuse,it is necessary that the union report the approximate cash value of the benefit which the officerpersonally derives from the use of the car, and enter an asterisk with a brief explanation under“OtherDisbursementstoOfficers”inSchedule11,Column G,ofthe LM-2.

(TechnicalRevisions:Dec.2016)

214.816LOANSTOOTHERLABORORGANIZATIONS

On its annual report a labor organization need not list separately with supporting detail loansmade to labor organizations whether or not affiliated with it.Loans made to labor organizationsmust be reported in Items 24 and 61 of Form LM-2 or Items 26 and 53 of form LM-3 as part ofthe aggregate of all loans.On Form LM-2 a loan to another labor organization must also beincluded in the total on the “Total of loans not listed above”of Schedule 2 as part of theaggregateofloanstoentitiesother than an “officer,employee, member, and business enterprise.”

(TechnicalRevisions:Dec. 2016)

214.820UNIONPURCHASEOFOFFICER’SMORTGAGE

An international bought a block of 20 mortgages for investment purposes from a mortgagelending institution.The face value of the mortgages totaled $250,000.This transaction wasreportedontheLM-2atline26“Investments,”onStatement A--Assetsand Liabilities.

In the course of an audit of the international’s records to verify the LM-2 filing, theinvestigatornotedthatoneofthemortgagors wasan employeeof theinternational.Indiscussingthis block mortgage purchase by the international with the financial institution concerned, theinvestigator ascertained that this mortgage loan was issued to the employee and included in theblockattherequestofakeyofficial ofthe international.

In the light of the above, the report of the international is incorrect and the mortgage loaninvolving the employee (face amount $20,000) should be included under “Loans Receivable,”andsupportedwithproperdetailinSchedule2.

Inasmuch as the loan in question was one indirectly made by the international, there appearstobeaviolation ofsection503(a) oftheAct.Suchmatters shouldbepursuedin accordance

withexistingproceduresinvolvingcriminalviolationsundersection503.(TechnicalRevisions:Dec.2016)
214.830UNIONEXPENSESFORJOINTPICNIC

For many years it had been the custom of Company X to sponsor an annual picnic for itsemployees.After the Company was organized by Union Y, the union decided that it would co-sponsor the picnic and share the expenses equally with the Company.The cost of the picnic forthe200 employees of the Company was $3,000.

Since section 201 requires a union to report all of its disbursements, Union Y would berequired to report the amount of money it donated to help defray the expenses of the picnic in itsannualfinancialreport.

214.840DISBURSEMENTOFASSETSPRIORTOMERGER

Local X merged with Local Y.Prior to the merger all of the assets of Local X weretransferredto a corporationsetuptoholdtheseassets.

In these circumstances, a terminal report is required from Local X in order to apprisemembers of the union and the public of the independent existence of these assets.The transfer ofany cashassets to the corporation should be reported in Item 53 of the LM-2 as “otherdisbursements,” and described sufficiently to identify the purpose.If assets other than cash, suchas a building, are transferred, the related transactions should be reported only as “additionalinformation”in Item69of FormLM-2in sufficientdetailtodescribetheactiontaken.

In the event the union is entitled to use the LM-3 rather than LM-2 for its terminal report, theappropriate item to report the transfer of any cashassets to the corporation would be Item 5, anda detailed description of the purpose of the transfer should be shown in Item 56.If assets otherthan cash, such as a building, are transferred, the related transactions should be reported only as“additionalinformation” in Item56, of LM-3insufficientdetailtodescribethe action taken.

WhilenoadditionalinformationistechnicallycalledforbyItem5ofLM-3,section402.5ofthe Regulations (29 CFR 402.5) calls for full details as to the termination of existence of theLabor organization.In any event, the Secretary has the power under section 208 to revoke aunion’seligibilitytofiletheLM-3report ifthisisnecessarytoobtainfulldisclosure.

(Technical Revisions: Dec. 2016)214.850PAYMENTSTOTRUSTFUND

Payments made by a union to a trust fund established by the union for the benefit of officersmust be reported in the annual report of the union on line 5555, “Benefits,” supported byinformationin Schedule20,onthe LM-2, orunder Item50 on the LM-3.

In addition, the first year that payments are made, an amended Form LM-1 must be filed withthe labor organization’s LM-2 or LM-3 since the establishment of the trust is a change in theinformation reported under Item 18 (c), “Participation in insurance and other benefit plans,” oftheunion’sLM-1.

(TechnicalRevisions:Dec.2016)