How to Form a Nonprofit Corporation

NNP11
TABLE OF CONTENTS

Your Legal Companion for Forming a Nonprofit Corporation    1
Part One: How Nonprofit Corporations Work
1
Is Nonprofit Incorporation Right for You?    5
Is Your Group a Nonprofit That Can Use This Book?    7
Benefits of the NonprofitCorporation     9
The Disadvantages of GoingNonprofit    13
How Nonprofits Raise, Spend, and Make Money    16
Your Path to Nonprofit Status    18
Where Should You Incorporate?     18
2
Legal Rights and Duties of Incorporators,
Directors, Officers, Employees, and Members    21
How Many People Are Needed to Form a Nonprofit Corporation?    22
Incorporators and Their Role as Promoters    22
Directors    25
Officers    34
Employees    35
Membership Nonprofits    36
3
Requirements for Section 501(c)(3) TaxExemption    39
Section 501(c)(3) Organizational Test     40
Valid Purposes Under Section 501(c)(3)    41
Other Requirements for501(c)(3) Groups    48
Information for Specific Questions About Your GroupÕs Activities    55
4
Public Charities and Private Foundations    57
The Importance of Public Charity Status    58
How to Qualify for Public Charity Status    59
Private Foundations    74
5
Other Tax Benefits and Reporting Requirements    77
Federal and State Tax Deductions for Contributions    78
Federal Estate and Gift Tax Exemptions    79
Federal Unrelated BusinessIncome Tax    80
State Corporate Income Tax Exemptions    82
Other State Taxes    82
State Solicitation Regulations    83
State Nonprofit Corporate ReportRequirements    84
Part Two: Incorporating Your Nonprofit
6
Choose a Name and File Your Articles of Incorporation    87
View Materials From Your Secretary of State    89
Choose a Corporate Name    89
Check Name Availability    94
What to Do When ThereÕsÊa Name Conflict    95
Reserve Your Corporate Name    96
Perform a Name Search    96
Protect Your Name    100
Prepare Your Articles of Incorporation    101
File Your Articles ofÊIncorporation     116
7
Prepare Your Bylaws    119
Choose a Membership or Nonmembership Structure    120
Purpose and Scope ofOurBylaws    121
Prepare Your Bylaws    123
Prepare Membership Provisions    134
8
Apply for Your Federal 501(c)(3) Tax Exemption    139
Getting Started    141
Do You Need to FileÊForm 1023?    146
Prepare Your Tax Exemption Application    147
Filling Out the Schedules    186
Assemble and Mail Your Application to the IRS    192
What to Expect From the IRS    194
The Federal Determination Letter    194
9
Final Steps in Organizing Your Nonprofit Corporation    197
Obtain State Corporate Income TaxExemption    198
Set Up a Corporate RecordsBook    198
Prepare the Minutes of YourFirst Boardof DirectorsMeeting    199
Place Minutes and Attachments in CorporateRecords Book    202
Issue Membership Certificates     202
File Fictitious or Assumed Business NameStatement    202
Apply for a Federal NonprofitMailingPermit    203
Apply for Property TaxExemptions    203
File an Initial Corporate Report Form    204
Register With the AttorneyGeneral    204
Comply With Political Reporting Requirements    205
Prepare Assignments of Leases andDeeds    205
File Final Papers for PriorOrganization    206
Notify Others of YourIncorporation    206
10
After Your Corporation Is Organized    209
Piercing the Corporate VeilÑIf You Want to Be Treated
Like a Corporation, ItÕs Best to Act Like One     210
Federal Corporate Tax Returns    211
State Corporate Tax Returns and Reports    213
Federal and State Corporate Employment Taxes    213
Employee Income Tax Returns    214
Sales Tax Forms and Exemption From Sales Tax    214
Licenses and Permits    214
WorkersÕ Compensation    215
Private Insurance Coverage    215
Dissolving a Nonprofit Corporation    215
11
Lawyers and Accountants    217
Lawyers    218
Legal Research     219
Accountants and Tax Advice    220
A
Using the Interactive Forms and Other Online Material    223
Editing RTFs    224
List of Forms    225
Corporate Forms
Incorporation Checklist
Application for Reservation of Corporate Name
Articles of Incorporation
Articles Filing Letter
Bylaws
Waiver of Notice and Consent to Holding of First Meeting of Board of Directors
Minutes of First Meeting of Board of Directors
IRS Forms and Publications and Tax Articles
Form 1023: Application for Recognition of Exemption (with Notice 1382)
Instructions for Form 1023
Form SS-4: Application for Employer Identification Number
Instructions for Form SS-4
Form 5768: Election/Revocation of Election By an Eligible Section 501(c)(3) Organization
To Make Expenditures To Influence Legislation
Publication 557: Tax-Exempt Status for Your Organization
Publication 4220: Applying for 501(c)(3) Tax-Exempt Status
Publication 4221-PC: Compliance Guide for 501(c)(3) Public Charities
Publication 4221-PF: Compliance Guide for 501(c)(3) Private Foundations
Publication 1828: Tax Guide for Churches and Religious Organizations
IRS Revenue Procedure 75-50
IRC Section 4958, Taxes on Excess Benefit Transactions
IRS Regulations Section 53.4958-0, Table of Contents
Public Charity or Private Foundation Status Issues Under IRC ¤¤509(a)(1)Ð(4),
4942(j)(3), and 507
Disclosure, FOIA and the Privacy Act
Update: The Final Regulations on the Disclosure Requirements for Annual Information Returns and Applications for Exemption
Education, Propaganda, and the Methodology Test
Election Year Issues
Lobbying Issues
Private School Update
UBIT: Current Developments
Intermediate Sanctions (IRC Section 4958) Update
IRS Revenue Ruling 2007-41 Political Campaign Prohibition Guidance
Internal Revenue Bulletin (IRB 2008-18) with T.D. 9390 Final Regulation changes to
Section 4958 regulations

B
How to Locate Incorporation Resources Online    227
C
Information and Forms    229
Incorporation Checklist
Special Nonprofit Tax-Exempt Organizations
Application for Reservation of Corporate Name
Articles of Incorporation
Articles Filing Letter
Bylaws (including Membership Provisions and Adoption of Bylaws clause)
Waiver of Notice and Consent to Holding of First Meeting of Board of Directors
Minutes of First Meeting of Board of Directors
IRS Form 1023: Application for Recognition of Exemption (with Notice 1382)
IRS Form SS-4: Application for Employer Identification Number
IRS Form 5768: Election/Revocation of Election By an Eligible Section 501(c)(3)
Organization To Make Expenditures To Influence Legislation

Index    317