Question

When a tax-exempt organization dissolves, the managers must ensure that:

a) Assets are distributed to insiders.
b) Remaining assets are given to a for-profit entity.
c) Remaining assets are distributed to other tax-exempt organizations.
d) Liabilities are transferred to the individuals who benefited from the organization.

Answer 1

Upon the dissolution of a tax-exempt organization, the managers are required to distribute any remaining assets to other tax-exempt organizations, pursuant to the organization's tax-exempt status terms.

Step-by-step explanation:

When a tax-exempt organization dissolves, the managers must ensure that remaining assets are distributed to other tax-exempt organizations. This process is crucial because tax-exempt entities are granted their status based on the agreement that any excess assets, upon dissolution, will be used to further exempt purposes, rather than being distributed to insiders or for-profit entities which would be inconsistent with the reason for their tax-exempt status. Therefore, the correct answer to the question is that c) Remaining assets are distributed to other tax-exempt organizations.