Does "Not for Profit" corp' = charitable contribution?

[LCP]

Client "donates" run-down property to a "City development, Inc, a not for profit corp."

Paperwork looks more like a sale for $1.

Charitable contribution?

[gkaiseril]

Only if it is an IRS 501(c)3 charity.

There are development corporations that are designed to be a not-for-profit corporation and perform work like commercial for profit activities and are not non-profit charitable organizations the do not make a profit but perform charitable acts.

These development corporations are not charities. No charitable contribution.

Is one of the members of this development corporation an owner of the property being sold?
Is there a mortgage on the property being assumed by the not-for-profit?
Is this a way to get around a building code violation or condemnation by the city?

[LCP]

Only if it is an IRS 501(c)3 charity.

There are development corporations that are designed to be a not-for-profit corporation and perform work like commercial for profit activities and are not non-profit charitable organizations the do not make a profit but perform charitable acts.

These development corporations are not charities. No charitable contribution.

Is one of the members of this development corporation an owner of the property being sold?
Is there a mortgage on the property being assumed by the not-for-profit?
Is this a way to get around a building code violation or condemnation by the city?

No, no, and quite possibly.

Taxpayer died this year and spouse is somewhat in the dark. There were two small apartment buildings and one of them was actually demolished beforehand.

[Koss]

Agree

I agree with the comments made by gkaiseril...

It is possible for an organization to be a legitimate not-for-profit corporation under the governing state law, without being a charitable organization under IRC 501(c)(3).

Being not-for-profit under the state law makes the organization eligible for various types of grants and special loans. The other big difference is that a not-for-profit corporation generally does not issue stock. A not-for-profit corporation, even if it is not tax-exempt under IRC 501(c)(3), has a very different ownership structure than a for-profit corporation.

With that being said, a gift to a not-for-profit corporation is not a deductible charitable contribution, unless the organization is exempt under IRC 501(c)(3).

The IRS has a website that allows you to search a database to determine whether an organization is tax-exempt.

Here's the link:

http://www.irs.gov/charities/article/0,,id=96136,00.html

Be aware, however, that many organizations that are indeed tax-exempt are not listed in this database. There is a discussion about this on the website. In most cases, the eligible organizations that are not listed in the database are churches and religious organizations. Most other types of organizations have to apply for exemption in order to be recognized.

BMK

[CarolToppCPA]

Do non tax exempt NPOs pay corp income tax?

Koss,
I know what you said is true:
"It is possible for an organization to be a legitimate not-for-profit corporation under the governing state law, without being a charitable organization under IRC 501(c)(3)."

Do these NPOs that are not tax exempt file a corporate income tax form?
Seems to me like they should .

I have dealt with several tiny NPOS and try to convince them to file for TE status to avoid paying tax on their surplus. Many drag their feet for years and never file for TE status (all volunteers organizations, etc). I say they should be paying corporate income tax until they receive TE status.

What do you think?