! to provide for distributions for

CAUTION non-charitable interests, you won’t

qualify for tax-exempt status.

Line 2. Formation date . The date you enter should be consistent with your organizing document.

• If you’re a corporation, enter the date that your articles of incorporation were filed and approved by the appropriate authority.

• If you’re an LLC, enter the date that the appropriate authority filed your articles of organization or other organizing document.

Line 5. Successor organization. You are a “successor” if you:

• Took over activities previously conducted by another organization,

• Took over 25% or more of the fair market value of the net assets of another organization, or

• Were established upon the conversion of an organization from for-profit to non-profit status.

Instructions for Form 1023 7

you were also contemplating offering scholarships in the future, but currently have no plans to do so, then the scholarship activity would be speculative, and you should not describe it.

Some organizations (such as credit counseling organizations (see Part IV, line 8), childcare organizations (see Part IV, line 12), agricultural research organizations (see Part VII, line 1), or cooperative hospital service organizations (see Schedule C)) must meet specific operational requirements to qualify for exemption under section 501(c)(3). If you’re such an organization, be certain to include an explanation in your activity description of how activities you conduct (or don’t conduct, if the specific operational requirement limits permissible activities) satisfy those specific operational requirements.

competition, and preventing cruelty to children or animals.

The generally accepted legal definition of “charitable” includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency. Therefore, the phrase “relief of the poor” in your organizing document properly limits your purposes.

Limiting your purposes by reference to section 501(c)(3) generally will be sufficient to meet the organizational test under section 501(c)(3). Your organizing document may also sufficiently limit your purpose by reference to a specific charitable purpose such as “relief of the elderly within the meaning of section 501(c)(3).” However, purposes listed in your organizing document broader than those listed in section 501(c)(3) may cause you to fail the organizational test. In that case, you will need to amend your organizing document before applying. A reference to section 501(c)(3) won’t ensure that your purposes are limited to those described in section 501(c)(3) if other provisions describing your purposes include one or more non-exempt purposes. The following is an example of an acceptable purpose clause.

The organization is organized exclusively for charitable, religious, educational, and scientific purposes under section 501(c)(3) of the Internal Revenue Code, or corresponding sections of any future federal tax code.

See Pub. 557 for further information and examples of how to limit your purposes.

Line 2. Dissolution clause. Your organizing document must provide for the permanent dedication of your assets to a section 501(c)(3) purpose. This means that if you dissolve your organization in the future, your assets must be distributed for an exempt purpose described in section 501(c)(3), or to the federal government, or to a state or local government, for a public purpose. In certain states, you may rely on state law to establish the permanent dedication of assets for exempt purposes. This is based on Rev. Proc. 82-2, 1982-1 C.B. 367. For additional information, search “Operation of state law” at IRS.gov.

Foreign organizations may be able to rely upon the applicable laws of their jurisdiction in a similar manner. If relying on a foreign law, you must provide a copy of the applicable law with an English translation.

Naming a specific organization to receive your assets upon dissolution will be acceptable only if your organizing document requires that the specific organization to be exempt under section 501(c)(3) at the time your dissolution takes place and provides for a qualified alternative recipient if the named organization isn’t exempt under section 501(c)(3) at that time. If your organizing document states that your assets would be distributed to members or private individuals or for any purpose other than those provided in section 501(c)(3), you must amend your organizing document to remove such statements.

The following is an example of an acceptable dissolution clause.

Upon the dissolution of this organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose.

See Pub. 557 for further information and examples of acceptable language for dedication of assets in your organizing document.