Legal Question in Business Law in Oklahoma

Not for profit to LLC

Our roller derby league was a not for profit. 2 of the owners quit without a replacement plan in place. 2 members of the league started an LLC and the previous owners transfered the trade name over to the LLC. There is a cash balance in the not for profit account. What are the options for what can be done with that money? Can it be transfered to the LLC, must it be given as a charitable donation, can it be used on operating expenses?


Asked on 3/15/08, 3:57 am

1 Answer from Attorneys
Marsha Dixon

Re: Not for profit to LLC

This is a difficult question to answer because it is based on whether you completed bylaws, the purpose for the non-profit and whether or not you are recognized and a foundation or charitable organization under the 501(c)codes. The LLC should have been governed under a operating agreement. You did not mention any of the legal and administrative requirements that were met so it is difficult to advise what you should do with the funds. However, we can say that non-profit funds cannot be used for profit activities. It must be used for the purpose that it was established or collected under the IRS Revenue Codes, particularly, if the funds were derived from charitable contributions.

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Answered on 3/20/08, 6:32 pm


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