an organization incorporated under state laws and approved by both the state's Secretary
of State and its taxing authority as operating for educational, charitable, social,
religious, civic or humanitarian purposes. A non-profit corporation (also called
"not for profit corporation") is formed by incorporators, has a board of directors
and officers, but no shareholders. These incorporators, directors and officers may
not receive a distribution of (any money from) profits, but officers and management
may be paid reasonable salaries for services to the corporation. Upon dissolution
of a nonprofit corporation its assets must be distributed to an organization existing
for similar purposes under the "cy pres doctrine. " In order for contributions to
the corporation to be deductible as charitable gifts on federal income taxes, the
corporation must submit a detailed application (with a substantial fee) for an Internal
Revenue Service ruling that it is established for one of the specific nonprofit
purposes spelled out in the Internal Revenue Code. Informational tax returns must
be filed annually with the IRS and the state taxing body. In addition, the state
Attorney General may have oversight powers to determine if the corporation is abiding
by state laws by limiting its activities to its approved non-profit purposes and
not milking the corporation for disguised profits.
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