Frederick Jorden wrote:

- quote -

I believe there is a similar requirement in my state (WA),
although I think it would be more appropriate to refer to
"non-profit" organizations rather than "charitable." Because
of this I would think it would be virtually impossible to
actually CONVERT an existing non-profit entity to for-profit
status. Rather, I think you would liquidate the non-profit,
making an appropriate distribution of its assets, and then
start a new for-profit organization from scratch.

If anyone is confused, this is NOT the maneuver I was
referring to in my prior message. I was referring to simply
terminating the organization's "tax exempt" status for
federal income taxes WITHOUT any underlying change in the
entity's organizational status. Terms like "non-profit" and
"tax exempt" are frequently used interchangeably, but they
are not, not, not the same thing! <g
MTW

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MTW wrote:
- quote -

The suggested wording for articles of incorporation, VA
State Corporation Commission, of a non-profit corporation
include terms that upon termination all remaining assets are
to be transferred to another charitable organization. I am
not sure that they will charter an organization without this
provision.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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Ignateous Laughing wrote:

- quote -

Actually, you are asking two different questions. Changing
from non-profit to for-profit status is a matter of STATE
law. But, I assume you aren't really intending to do that.
Rather, I assume that you simply wish to revoke the
organization's exempt status for FEDERAL income tax purpose
(while the organization continues to be incorporated as a
"non-profit" under applicable state law).

This is not that uncommon. I once helped a club do this, and
I've heard of several others that have done likewise. As I
recall in the case I handled, the club was being audited by
the exempt organization people at the time. As part of the
audit, we requested that the exempt status be terminated. As
I recall, this was handled "routinely" and did not involve
much more than a board resolution to authorize it.

But, I don't know whether an "unrelated" NOL can be carried
forward.

MTW

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If a 501(c)(7) decides, due to the fact that they anticipate
substantial unrelated business income in the future, to
become a for profit business, what do they need to do to
terminate their election to be treated as tax exempt? Would
the corporation maintain any NOL from unrelated business
ventures into the for profit business?

TIA,
IB

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