Case Study

Dissolving a Nonprofit corporation is a highly complex procedure due to the charitable assets; however, Reese took the time to do this as it protected church members from facing any of the increased liabilities in their personal capacity.

Daryl Reese is proud to represent nonprofit organizations (NPO) and other businesses in California. This California-based attorney represents associations, educational groups, charities, foundations, community service organizations, religious groups, and other organizations that currently hold or are pursuing nonprofit status with assistance from our office.

Reese’s recent work with a church in Marin County is a perfect example. From protecting this faith community to dissolving the organization’s assets, reducing its tax bill, building a relationship with the church, and educating them on legal matters, Daryl Reese continues to provide long-term value to these NPOs.

What Is the Difference Between an Unincorporated Association and a Corporation?

This faith community was initially an unincorporated nonprofit association.

An unincorporated association is a group of two or more people who have come together by mutual consent for a shared legal purpose.

The association’s members have created an unincorporated nonprofit association if the organization’s objective is to assist the public in some way and doesn’t include making a profit.

A corporation is a legal entity that exists independently of its shareholders, members, directors, or officers. Corporations have many of the same rights and obligations as natural persons under the law. They have the legal authority to sign contracts, lend and borrow money, hire people, sue and be sued, possess assets, and pay taxes.

How Did Local Attorney Daryl Reese Help this Church in Marin?

A few of the ways Daryl Reese helped this community include:

Incorporating the Church

Incorporating this church was only going to offer the community increased legal protection as they were about to receive assets from another church. By incorporating the church, Daryl ensured that the decision-makers of the church would be protected from being liable in their personal capacity for any debts. As long as they continue to maintain their fiduciary duty and not do anything egregious, then, there’s no personal liability exposure. The church is now a new legal entity that is then responsible for any potential liability.

Dissolving the Nonprofit Corporation and Transferring the Assets

Dissolving an NPO is a highly complex procedure due to the charitable assets; however, Reese took the time to do this as it protected church members from facing any of the increased liabilities in their personal capacity.

Daryl transferred the assets from the dissolved entity to the newly formed corporation, all while complying with the laws surrounding these transfers of assets and liability.

Obtaining Tax Exemption Status and Saving them a Great Deal of Money

One of the crucial aspects of forming a corporation is obtaining tax-exempt status from the IRS and California Franchise Tax Board. Daryl helped prepare the 501(c)(3) application for the IRS and applied to get the church property exempt from tax, which is a complicated process best handled by a trusted attorney. One of the main assets being transferred from the other organization was the church building with a fair market value of approximately $6 million. Through working with the board of directors and utilizing his experience in this field, Reese saved his client tens of thousands of dollars in property tax.

Giving them a Legal Education and Understanding of How to Run the Corporation

Reese made an effort to ensure that this church understood its rights, which built a sense of trust between the two parties. When forming a corporation, there is a lot of information to absorb, such as understanding tax exemptions. Daryl taught this church board about corporate governance so that they can successfully run the church in the future.