Situation: Non profit corporation organized for over 30 years has never filed for 501(c)(7) recoginition and has never filed 990's (probably has not met requirements to file before. Is wanting to do a one time sale of standing timber. Should 1024 application be made for existing corporation or should new entitiy be formed, 1024 application made, and then sell timber.

If 1024 application is made for existing corporation and the answer to "what will happen to assets upon dissolution" is distributed to members, will that prevent the exemption from being granted?

Hello jec:

I'm probably not going to help much, but I have an opinion.

It's kind of hard to figure out your exact situation. I KNOW there are other salient factors - probably 30 years worth. You need the services of a CPA.

What I'm able to gleen, however, is that no matter how you eventually structure the corporation, and how you clean up its past, it's the corporation ITSELF which may or may not be tax exempt. Certainly, the MEMBERS are not. If cash is distributed to members, they're going to owe taxes on it.

excon

It is my understanding that only Churches are exempt from filing for recoginition, so unless this is a church, it is my somewhat uneducated opinion they will need to.

but as excon said, exp since the sale of timber can be a large sum of money, I would get a CPA or tax attorney for an official opinoin

A 501(c)(7) is a social club, which has its own set of rules that can be found here: www.irs.gov

Requirements for filing a 990 -- at least for a 501(c)(3)-- is annual income in excess of $25,000.

I would look through the rules to see what the proper distribution of assets is for it but I am fairly certain that outside distribution, at least for a 501(c)(3) is not permitted.

And I am not sure it's a nonprofit corporation you have already formed unless its been granted a 501 status of some sort from the Feds. It seems to me that until then, its just a corporation. I would prefer to see a CPA consulted since there seems to be some oversite here that is fretful.