Friday, September 8, 2017

Conversions of the Status of Section 501(C)(3) Organizations

Douglas M. Mancino
29 Tax’n Exempts 3
July/August 2017

           In this article, Douglas Mancino, explains the different types of conversions nonprofit companies go through to become for-profit organizations. He starts off the article by listing the reasons that nonprofits wish to convert to for-profit companies: “the need to access capital, have the ability to issue stock to public and private investors, enhance the corporation’s ability to diversify into otherwise taxable lines of business, provide a means whereby the corporation can offer stock options, enable the corporation to adopt an employee stock ownership plan, and to avoid the limiting effects of tax rules.” He then starts in on his explanation of the different type of conversions. He explains that there are four different types of conversions: (1) Conversion in place, (2) asset sales, (3) mergers, and (4) drop-down conversion. Unfortunately, the full article can only be accessed with a Westlaw account. If you want to learn more about the different types of conversions click here: 



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