Question: 501c financials - transfer of "beginning balances"

We have had a long standing PTO that did not incorporate or register as a 501c. We incorporated in marcha midway thru our financial year and are now filing the 501c application. I understand from the startup toolkit that the IRS considers the start of the organization as the day incorporated, and therefore the finanicals for yr 1 on the 501 c application should be from incorporation date to year end. However I dont know how to treat our existing cash balances and activity prior to the March incorporation. Should I include our net cash balances as of incorporation as "seed" money in the in the gifts lines?

Asked by cmhayesduffey

Answers:

Advice from PTO Today

Craig writes:
No, your beginning balance is an asset. The IRS expects you to have existing assets, so it's OK to list it as such.

Advice from PTO Today

Craig writes:
Just to clarify a bit, we talked to the IRS about this. While they consider your incorporation date your legal start date, they know that its common for groups to have been operating before that date. Cash on hand would be listed as an asset on your financials, not as a gift. Listing it as an asset won't raise any questions on your form 1023.