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You indicate that you were "left a research group" -- what exactly did you receive (stock, business property, financial assets, a bank account in the group's name)? What you'll need to do next really depends on what type of legal structure this group existed as before your friend's passing, and in what manner and form he/she transferred that entity to you. If you can provide some more information, I sure someone here can help.

Welcome to this web site. Great Question. Where are you??. What State??
You need some professional help, like a Lawyer or an Accountant.
Did he file TAX RETURNS??
What are your plans for the next 3 to 5 years.
Are you going to run this as a BUSINESS?? or continue like a hobby.
LUCKIEST

Let's start with the name -- is it registered with your state or county clerk, does it have a federal tax ID number, and/or a bank account under that name? It sounds like the answer to all of those is "no." In that case, the group really doesn't exist as a legal entity -- as you indicated, it was in a legal sense a "hobby" for your friend, so any taxes due or other obligations (including bills) that exist are a matter for his estate.

Since you refer to the gentleman as your friend, I assume you're not part of his estate, and didn't automatically inherit anything of his under your state's law. So as far as the equipment goes, did you get it in probate, did his estate simply agree that you could keep it, or does his estate not even know it exists? The same could be asked of any intellectual property that resulted from the group's research. It sounds as though the group's "assets" would all be considered his property under the law, so you need to confirm that you're in legal possession of them now.

Once you've done that, if your desire is to continue the work of group, my advice would be to register it, get a tax ID number, and open a bank account in the group's name -- so you can separate it from your personal obligations and finances, and take advantage of whatever tax benefits it offers. Choosing the preferred legal structure for the group and then following the process to register it depends on the state in which you are located, so a little more information about that is needed to point you in the right direction.

The people he "left" to you are volunteers, so they are not legally obligated to him or you. They can do whatever they want (including continuing to volunteer for the group as a separate legal entity under your leadership).

That's just it. I went to both the city and county buildings to register it. It didn't fit any catagories. And don't laugh, but paranormal research just doesn't fit under any of the listings that the goverment has set up. The city people sent me to county, county sent me to city. The best they could come up with is a fortune teller classification. (and that was 500 dollars a year...more than we probably take in) There is no place of business as we walk around town and just talk to people. We go to people's homes to do investigations, but never take money from them. We are in Va .. and as far as the estate goes....
everyone just expected me to continue, so after the funeral they just told me that they would help me get the stuff out of his home. I did open a check account so that I could keep the money straight, however, it has a whole 36.00 dollars.
Thank you for all your help
Keeler

As I understand the situation now, you seem to have three basic options:

1) Run the group as a hobby the way your friend did. According to the IRS, the activity is only considered to be a "business" if it is carried on with the reasonable expectation of earning a profit. If you are not expecting to earn a profit (and in fact don't earn a profit in at least three of five tax years), then it is a "hobby" and you'll have no tax worries. Of course, you can't generally itemize expenses or deduct losses for a hobby the way you could a business. Even if you decide it's a hobby, it's essential to keep good records as evidence that you're not earning a profit.

2) Incorporate the research group in Virginia, and file for exempt status as a "social club" under Internal Revenue Code section 501(c)(7). (I think this would a lot easier path than trying to qualify as a foundation or as an educational or religious organization.) Your volunteers would become "members" of the club. You'd also be required to comply with other applicable regulations, operate as a corporate entity, and file tax returns -- but you'd have tax-exempt status. For more info about forming a corporation in Virginia, visit http://www.scc.virginia.gov/division/clk/forms/brg.pdf. For more info about regulations regarding social clubs, visit http://www.irs.gov/charities/nonprofits/article/0,,id=96189,00.html.

3) Form a regular for-profit business in Virginia. This is probably the least appealing option since, as you noted, it could cost you more to have the business than it would make in profit. Reimbursing the volunteers for their work under this structure could also be tricky.

Are we getting closer to a helpful answer?