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A professional organization I belonged to is in the process of dissolution. The assets of the soon-to-be-defunct corporation are being distributed amongst the members of the executive board. Most if not all of us plan to donate our shares to similar organizations with 501(c)(3) status.

Exactly what kind of "professional organization" is this entity, that's being dissolved? A regular corporation? A 501(c)(6) exempt org.? (Business leagues, etc.) A 501(c)(3) charity?

In the case of most 501(c)(3) charities I've seen, the articles of incorporation and/or bylaws require that upon dissolution, the assets must be distributed to another similar organization. That being the case, the officers/directors should not be a party to the transaction. And if this is a large amount, the issues of unreasonable compensation and private inurement could come into play.

What kind of assets -cash and/or marketable securities? If so, that could be distributed directly to the recipient organization(s). Another org. may not want your office equipment and supplies, etc.

My check has arrived, and I will receive a 1099-MISC form in January.

OK, that sounds like it's mostly liquid assets, and it's consistent with your receiving the money in your capacity as a director. That would be self-employment income. Conversely, if you were receiving proceeds of stock in a corporation that dissolved, that would be capital gain/loss, as the case may be.

Based on my understanding of what I read, even though I donate the entire amount (and then can take a deduction off my income taxes), I will still be liable for FICA taxes (SS and Medicare). Am I correct?

Based on how they plan to report it, then yes.

Bill
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