If a nonprofit corporation dissolves and transfers/donates its net remaining assets to another charity, do the board members of the dissolving nonprofit get a tax deduction for the transfer/donation?
No. The directors don’t own the nonprofit and have no personally-owned property interest that they can give away. An organization that is recognized as a charitable organization under section 501(c)(3) of the Tax Code is legally required to dispose of its net remaining assets for other charitable purposes and this usually is done by transferring them to another 501(c)(3) organization. State law will normally require the same result. The directors can get into a lot of trouble if they don’t give the funds for charitable purposes, but get no personal benefit when they do.
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Our 501c3 non profit fire company wants to transfer our real property and building to the municipality that we provide emergency services to help fund a new fire station that they will own and we will move to to continue our our mission. No board members will benefit from this. Is this allowed under IRS laws and Pennsylvania charitable organization laws?
This is an interesting question, see my answer.
--Don Kramer
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