Church liquidation- big gain on sale of property

[LCP]

Assume you have a small stand-alone church that has jumped through all the hoops and is properly operating as a charitable organization.

They are going to disband and the church property they own has appreciated big time.

Is that gain non-taxable assuming they use the proceeds for charitable purposes? What happens if the members split up the funds?

[Corduroy Frog]

Who decides?

A better question is "Who decides?" (Not that it makes any difference on taxes)

I think if proceeds are distributed to other charities, you are correct. If distributed amongst the membership, I believe a 1099-MISC should be issued to each, and each recipient should report on his tax return under line 21, "Other Income."

Back to the "Who decides." Where are the members going to go to church in the future? This church could by-pass reporting to the individuals by simply making gifts to the churches where the former members go. A strange circumstance, indeed, but by no means illigitimate.

This opens the door for imagination...

Sorta like the small community where I grew up. A guy moved in - a railroad maintenance worker, his son being a friend of mine. Drank a little - away from home a lot on derailments and such.

Another man moved in, a doctor with pretty wife and two kids. Didn't really go to church anywhere. We had about a half dozen churches closeby in the community.

Guess which new citizen was on the visitation list of every church? Guess which one wasn't? Sorta made me feel sorry for my friend...