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Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3597
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I have a nonprofit Organization 501c6 that is winding down

Customer Question

I have a nonprofit Organization 501c6 that is winding down its business and closed on October 29, 2015. The Board of Directors started a new nonprofit organization and the IRS granted exempt status on August 14, 2015. The Board transferred the assets of the 501c6 to the 501c3, which basically consisted of about $58k in cash. During the period between August 14, 2015 and October 29th, 2015 both Organization's shared the exact same board members. For purposes of the IRS code, are these two entities considered related Organizations?
thanks Deborah
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

The IRS criteria that one entity is related to another entity is:

1. The two entities have (i) significant common purposes and substantial common membership or (ii) directly or indirectly substantial common direction or control; or

2. Either entity owns (directly or through one or more entities) a 50 percent or greater interest in the capital or profits of the other. For this purpose, entities treated as related entities under the preceding paragraph shall be treated as one entity.

Based on the information you have provided, it appears that from August 14, 2015 through October 29, 2015, these would be considered related organizations.

Please let me know if I can assist you further.

Thank you and best regards,