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Merger under state law may result in a new entity or in one of the
parties to the merger ceasing its existence. In either case, the IRS
must determine whether the post-merger entity continues to be organized
and operated for section 501(c)(3) purposes.
Accordingly, you should notify the IRS, by letter to
EO
Customer Account Services, of the merger, and submit copies of any
amendments to your articles of organization or by-laws as part of the
merger transaction. You may also wish to consider whether the merger
will result in other adverse tax consequences, such as recognition of
gains on assets transferred.
See an
article on the effect of Internal Revenue Code section 337 and
Treasury Regulation section 1.337(d)-4 on exempt organizations.
You may want to request a
private letter ruling on the tax consequences of a merger.
Source:
http://www.irs.gov/charities/article/0,,id=156421,00.html
Specific guidebooks on the "how to's" of nonprofit mergers can be found by clicking here!
TGCI Articles:
Making a Merger Go Smoothly for Nonprofit Workers
Which
Organization Should Dissolve in a Merger?
Article covers three ways in which to handle the merging of nonprofit
organizations.
A
well-known example of a nonprofit merger occurred in 2000, when
America's Second Harvest and Foodchain merged.
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