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Nonprofit Law/501(c)3 - Operations After Primary Facility is Closed Down


Currently, I am a member of a 501(c)3 Organization (formed as an Amateur Athletic Organization) of which the primary facility was on the edge of a military base originally run by the Navy (when the lease was originally negotiated) and later assumed by the Marine Corps. Later, when the lease for the facility was up for renewal, the Marine Corps exercised it's right to terminate the lease in 2011. As a result, the Organization sold all of the equipment and vacated the location of which the Organization has about $200k cash in the Organization's bank account. In addition, since the termination of the lease, the Organization has undertaken a search for a new location, without much success, and there is the possibility that a new location may never be found.

Therefore, questions are as follows:

1) Is there a time limit of which the Organization can continue a search for a new location? (and start up operations, again)

2) If a location cannot be found as outlined in #1, is there a time limit of which the Organization must terminate (i.e. dissolve) and distribute the assets (cash) pursuant to established procedures? Of Course, the Organization will continue to file the necessary informational returns while the Organization still exists.

Thank you for your attention to this matter.

There is no specific time period. Where an organization recognized as exempt becomes temporarily
inactive but retains its identity as a corporation or association, the exempt status need not be terminated. However, if the evidence clearly indicates that the organization will not resume operating for an exempt purpose, as required by Treas. Regs. Section 1.501(c)(3)-1(c)(1), the examiner should terminate the exempt status. Rev. Proc. 90-27, 1990-1 C.B. 514.

"Once an organization described in IRC 501(c)(3) fails to meet the
description of any of the IRC 509(a)(1) through (4) subsections,
however, private foundation status attaches." on pdf page 173

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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