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Nonprofit Law/Sale of equipment to a non-US based company


The Section 501(c)(3) organization planning to sell not significant portion of used equipment.  This is not debt-financed property.  

Are there any tax issues with selling equipment to a non-US based company or a company that will use them internationally?

Thank you

I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations that are not private foundations.  Therefore, I am assuming you are referring to a U.S. public charity (not a private foundation).

The only tax issue is that the organization must use normal procedures to make sure that it is obtaining the maximum money for the equipment.  Otherwise, it could be a violation for Internal Revenue Code section 501(c)(3) which is available at:
has, in part, that the 501(c)(3) organization must be "operated
exclusively for religious, charitable, scientific, testing for
public safety, literary, or educational purposes ... no part of the
net earnings of which inures to the benefit of any private
shareholder or individual".

Inurement (benefits to insiders) is discussed by the IRS at
(It takes a while to load the 52 page pdf file)
See on page 3 mention of equipment and sales:
--- Start of Excerpt ---
Individuals are not the only entities that have economic interests. Exempt
organizations have economic interests of their own. They must acquire assets and
equipment, hire employees, and purchase professional services in order to conduct
their activities. There is no prohibition against an exempt charity dealing with its
founders, members, or officers in seeing to the conduct of its economic affairs.
However, any transaction between an organization and a private individual in
which the individual appears to receive a disproportionate share of the benefits of
the exchange relative to the charity served presents an inurement issue. Such
transactions may include assignments of income, compensation arrangements,
sales or exchanges of property, commissions, rental arrangements, gifts with
retained interests, and contracts to provide goods or services to the organization.
---End of Excerpt---

 The 501(c)(3) organization would also need to maintain normal records of the sale. Public Charities' Record Keeping Requirements are discussed at from pdf page 24 to pdf
page 32 (it usually takes some time to download that 48 page pdf
document from the IRS site).

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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