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Corporation - seeking non profit

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    Corporation - seeking non profit

    The following are bullet points to try to explain my client's current situation:

    - Form filed is 1120C - Original Park. Original Park is on a Fiscal year 05/01/2016 through 04/30/2017. I am calling this entity, Original Park, because in 2014, the former treasurer dissolved the Original Park with the State of FL and registered Park 2 as a non-profit with the State. She thought since Park 2 was a non-profit with the State, a federal tax return was no longer needed. However the EIN for Original Park continued to be used for filing sales tax. Sales tax was collected on sales of T-shirts.

    - Trailer park consists of homeowners who rents the lot but own their home.

    - Park collects a $30 fee from homeowners to help pay for social events. This fee is not a required fee. Those who don't pay are not included in social events. If someone wanted to attend the social event who is not a member may buy a ticket.

    - My client moved into the trailer court last year and took over as treasurer. Form 1120C for Original Park wasn't filed for the 2014 and the 2015 tax year. FL-1120 was not filed as well. In 2016 I filed the 2014 and the 2015 Form1120C for the Original Park but not the FL-1120 for the Original Park. No late filing fee was assessed because no tax was due.

    - Nothing was filed with the IRS for Park 2. My experience with non-profits is very limited. I don't know but it seems to me that something needs to filed with the IRS to be accepted as a tax-exempt entity - Form 1024. Is this correct?

    - Other issues: Original Park has been operating in the State the past two years and is not registered. (I did not discover this until this year.) Client does not have the funds to pay the reinstatement fee.

    - Client would like tax exempt status under 501(c)7. I told her that she needs to see a CPA that has experience in the non profit area.

    As you can see this situation is a complete mess. I think my client should make Original Park a final year this year and pursue tax exemption status with the IRS. However should she pursue tax exempt status for Park 2 or start fresh and register a new corporation with the state? The potential problem with Park 2 is nothing has been filed with the IRS for the past two years for Park 2.

    Since the park is mostly filled with snow birds, the summer time has no activity. So I thought about making the 2016 tax return a final year. Another problem I run into with this is Form 966 is due 30 days after dissolution. Is there a late penalty if this form is not filed on time?

    This corporation, as you most likely already gathered, is not dealing with a lot of cash. ~$6,500 of revenue and $6,200 in expenses. No tax was due because there is a small NOL carry forward.

    Any advice that someone can provide me on how to advise my client regarding the fiscal year 05-01-2016 through 04-30-2017 is greatly appreciated.
    Last edited by PPJCPA; 08-18-2017, 12:42 PM.

    #2
    Corporation-seeking non profit

    Yikes- this is a really messed up situation all around.
    In order to be granted an IRS tax exemption for any 501(c) entity - it needs to file Form 1023 or 1024. As you stated, being a non 501(c)(3) it needs to file Form 1024 and pay the application fee. There's no reinstatement because it was never previously a tax exempt entity. Some financial information is requested of any prior year financial activities. As well, it is also required to file an annual Form 990 in some form (probably a 990-N post card e-filing). I can't address Florida situation as I'm not from Florida. I strongly recommend that you bring up all the filings with IRS as a C corp in order to officially close it, and file dissolution papers with Florida if it's required.
    Uncle Sam, CPA, EA. ARA, NTPI Fellow

    Comment


      #3
      There are a lot of things going on here.

      - Form 1024. Is this correct?

      F1023 or 1023EZ - both carry a significant filing fee: $400-850 I believe

      - Other issues: Original Park has been operating in the State the past two years and is not registered. (I did not discover this until this year.) Client does not have the funds to pay the reinstatement fee.

      Biggest question is how are you getting paid if they can't afford a reinstatement fee?

      - Client would like tax exempt status under 501(c)7. I told her that she needs to see a CPA that has experience in the non profit area.

      They need to fix the state registration and organize with bylaws of a nonprofit because there are a lot of particulars that need to be met. They seem to be a legal whirlwind and badly need an attorney (versed in NFPs) before a CPA.

      make Original Park a final year this year and pursue tax exemption status with the IRS. However should she pursue tax exempt status for Park 2 or start fresh and register a new corporation with the state? The potential problem with Park 2 is nothing has been filed with the IRS for the past two years for Park 2.

      Don't close it with IRS if you plan to pursue NFP status.

      Is there a late penalty if this form is not filed on time?

      I've not seen a penalty for late filing OR failure to file.

      Comment


        #4
        501(c)(7) entities file Form 1024. Form 1023 (or 1023-EZ) is for 501(c)(3) entities only.
        Uncle Sam, CPA, EA. ARA, NTPI Fellow

        Comment


          #5
          One more thing- the entity needs to check out what requirements are required if any with the Fla. Office of the Attorney General.
          Uncle Sam, CPA, EA. ARA, NTPI Fellow

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