Discussion:Dissolving A Non-Profit - Health Care
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Revision as of 00:59, 5 November 2009 Natalie (Talk | contribs) (Jeffrey, a NFP o) Next diff → |
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| The Ohio NFP will just dissolve.}} | The Ohio NFP will just dissolve.}} | ||
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| + | {{ForumReplyPost|UserID=Natalie|Date=November 5, 2009|Text=Jeffrey, a NFP organization doesn't simply dissolve. There are certain laws that they have to comply with. Generally, any assets in the organization MUST be transferred to another organization. I would still recommend an attorney be consulted.}} | ||
Revision as of 00:59, 5 November 2009
Discussion Forum Index --> Advanced Tax Questions --> Dissolving A Non-Profit - Health Care
Discussion Forum Index --> Tax Questions --> Dissolving A Non-Profit - Health Care
| 3 November 2009 | |
| I have a client with four entities. A partnership with 3 partners (1/3 each), a Non-profit- employees, revenues, expneses, etc, and then two additional "shell" companies.
Two of the partners have had no communications with my client for the past three years. His goal is to slowly dissolve the partnership and non-profit, while moving the business into his two shell companies. Can you think of any tax ramifications? The legality issues of doing such a transition without the other partners consent? What happens if you dissolve the intitial partnership with recieveables still uncollected? There is just a series of "what ifs" and I am wondering if anyone has run across an issue such as this. Additional, they are home health care businesses, which leads to another question....how do we transfer the employees? What about the medicare and medicade start-up? Are people going to be just willing to transfer to another company, goodwill? Much thanks. | |
| 3 November 2009 | |
| Profile: "Hello, My name is jeff and I am a tax manager in Cleveland, ohio." REALLY?
Hmmmmm. He's running a non-profit with employees and presumably assets? Can you just transfer such assets to private control? Sounds like your client needs to hire an attorney with some experience in non-profit matters. In fact, he might need a whole law firm to unwind him from his messes. | |
| 3 November 2009 | |
| Thanks for the sinde remark....Some cpas are unfamiliar in the world of NFP....
A non-profit with employees, no assets is indicative of the term "realy"...why don't you explain it to those less fortunate folks....Show me where it says a NFP can't have salaries... | |
| 3 November 2009 | |
| I'm no expert on Non Profits but they are not business entities owned by any individual or partners. When a Non Profit winds down it must donate all its assets to a similar Non Profit doesn't it? It can't liquidate and distribute its stuff to any "owners". Agree with Crow that your TP needs an attorney with experience in these matters.
Your TP would need to start a new entity if it wishes to proceed in the same field that Non Profit was in and possibly hire some of the prior Non Profit employees. Dissolving the partnership would be a separate issue. An attorney experienced is those matters should be consulted also. Sounds like your 1/3 owner wants to dissolve on his own without the input of the other partners who own 2/3rds. | |
| 3 November 2009 | |
| Jeffrey, you think it's ok to enjoy the tax benefits of a non-profit corporation, build up a book of "business" and certain other assets, and THEN set up a private "shell" corporation, and just la de da, transfer such assets to the "shell"?
Wow, that wouldn't be fair to the rest of the taxpayers who are playing by the rules, would it? In my state, you have to have manadatory language regarding the process of dissolution in the Articles of Incorporation. That process is spelled out in detail, by law. And, the last time I looked, it didn't have anything in such mandatory language about transferring the assets to the individual taxpayer's private "shell" corporation. Meaning, it's a no-no. You don't have to be an expert in NFP's to have some little ethical bell in your head go "ding ding". Also, you are crossing over the line into practicing law, another "ding ding". | |
| 3 November 2009 | |
| KathiJud is right. An exempt org cannot be treated as private property and its assets cannot be used to enrich an individual or for-profit company. http://www.irs.gov/pub/irs-tege/eotopicc90.pdf | |
| 4 November 2009 | |
| I am saying the same thing. I clarified my earlier statement, though I thought it was obvious. And there's another point I'm making: a corporation, including a non-profit, is a creature of state law. There are state laws you must comply with also, in the birth, management, and "death" of the corporation. It's surprising what you'll find there, if you know to look.
It may also be of interest to know that the state attorney general is mentioned in the non-profit corporations code more commonly than one might expect. I imagine that this is similar in all states, since it's based on a model code. Hmmmm, I wonder why the attorney general's office keeps popping up? Maybe the states take a particular interest in these non-profits, for obvious reasons. | |
| November 4, 2009 | |
| I agree an attorney is needed. And why would your client want to dissolve the nonprofit anyway? I can understand dissolving the partnership, but if the mission of the nonprofit will be carried on, it makes no sense to dissolve and have to go through the application process for exemption again, unless there are some big financial issues involved. | |
| 4 November 2009 | |
| Nat, Kathi, Tpasco - thank you.
Never once did I say he was transfering the NFP assets. I said he is transfering the "business" ie, partnership, without the other 2 partners and asking about the taxable event of the exchange as well as the legality issues that may arise. The Ohio NFP will just dissolve. | |
| November 5, 2009 | |
| Jeffrey, a NFP organization doesn't simply dissolve. There are certain laws that they have to comply with. Generally, any assets in the organization MUST be transferred to another organization. I would still recommend an attorney be consulted. | |
