Q: When a non-profit organization dissolves, does the IRS-required asset-distribution clause apply to fixed assets, home?
If a home was listed in a non profits assets on 990 form but the majority was purchased in Mexico (foreign country) with "own" money and only part from non-profit assets "donor", assuming the asset was purchased over 25 years ago, if the non-profit dissolves, is the asset required to be sold under IRS-required asset-distribution clause? If so, would only the portion of the proceeds that was used to initially purchase the fixed asset need to be distributed? For example 10k used from donor to initially purchase, would the 10k that was donated need to be distributed or would the entire value of the asset disregarding what portion of the asset was acquired using private "own" funds?
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A:
When a non-profit organization dissolves in California, the IRS-required asset distribution clause generally applies to all assets, including fixed assets such as a home. The allocation of proceeds upon sale would depend on the ownership structure of the property and the proportion of non-profit funds used for acquisition. If a portion of the property was purchased using non-profit assets, that proportion's value would likely need to be distributed, while the remainder may be attributed to the individual owner's funds. Consulting legal counsel is recommended to navigate the specific circumstances of the property and dissolution process.
Sincerely,
James L. Arrasmith
Founding Attorney and Chief Lawyer of The Law Offices of James L. Arrasmith
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