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Selling A 501c3

Corporate Law Discussions

Selling A 501c3

Postby Aethelmaer » Sun May 17, 2015 12:15 pm

Can you sell a 501c3 to another 501c3? What can you do if you can't sell and need to liquify?
Aethelmaer
 
Posts: 37
Joined: Fri Apr 18, 2014 11:02 pm

Selling A 501c3

Postby osrik » Sun May 24, 2015 12:40 pm

A 501(c)(3) organization is not owned and, therefore, it may not be sold.  However, the board of directors may be changed.  If you want to dissolve, instead, the present board would need to approve that. In order to have obtained IRS exemption determination, a 501(c)(3)

organization would have had to have the IRS required clauses in its

Articles of Incorporation as discussed starting on page 19 at

"Organizational test" at:

www.irs.gov/pub/irs-pdf/p557.pdf

and the sample dissolution clause is on page 69:

---Start of Excerpt--

Sixth: Upon the dissolution of the corpora-

tion, assets shall be distributed for one or more

exempt purposes within the meaning of section

501(c)(3) of the Internal Revenue Code, or the

corresponding section of any future federal tax

code, or shall be distributed to the federal gov-

ernment, or to a state or local government, for a

public purpose. Any such assets not so dis-

posed of shall be disposed of by a Court of

Competent Jurisdiction of the county in which

the principal office of the corporation is then

located, exclusively for such purposes or to such

organization or organizations, as said Court

shall determine, which are organized and oper-

ated exclusively for such purposes.

---End of Excerpt--

Each state has different statutory regulations relating to the

dissolution of nonprofits or the sale of substantially all of the

assets of a nonprofit.  The corporation would need to find and

follow those laws. If you give me the state I may be able to direct

you.

After the State dissolves the corporation, a corporate officer

should then notify the IRS that the  organization has been

dissolved. The IRS instructions are at:

www.irs.gov/charities/article/0,,id=156422,00.html

Harvey Mechanic

Attorney At Law

[email protected]
osrik
 
Posts: 54
Joined: Wed Jul 31, 2013 11:43 am


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