Legal Question in Real Estate Law in California

Re: public non-profit building

if it is a public building it belongs to the city, county or state govt and therefore who are you????? let them worry about it ---

Re: public non-profit building

I assume you are talking about a "public benefit" type of nonprofit corporation, and not a public building!

If a nonprofit public-benefit corporation sells a building that it owns for more than its investment in the building, thereby realizing a capital gain, the next question must be, "Is the nonprofit corporation currently also tax-exempt under IRC section 501(c)(3) or some other provision of the tax code?"

Most are at least eligible for exemption, but the exemption isn't automatic. It must be applied for and obtained, and thereafter maintained, by the nonprofit organization.

Also keep in mind that a nonprofit's transactions are subject to scrutiny. If the building were bought from or sold to a person with a connection with the nonprofit, it could be prohibited "self dealing."

You should look at the IRS Form 990 or 990-EZ the orgainzation files. Note that there is a section for reporting gains or losses from sales of assets other than inventory (990 Part I,lines 8a through 8d). See also Part VII.

If the gain on the sale of the building is retained in the organization and applied to its nonprofit purposes, and the organization remains eligible for tax exemption, I see no reason why a properly-reported gain should be taxable to the organization.