HN comment thread on how you can file a complaint with the IRS about this deal and their non-profit status:

https://news.ycombinator.com/item?id=21658324

From their press release: https://thenew.org/the-internet-society-public-interest-regi...

> Once the transaction is completed, PIR will continue to meet the highest standards of public transparency, accountability, and social performance in line with its longstanding purpose-driven mission, and will consider seeking B Corporation certification.

I guess they intend to abandon their non-profit status soon?

My understanding is that being a non-profit simply means the organization can never pay money out as shareholder dividends.

This is not the same as the organization can never end the year with more money in the bank than it started. This is not counted as profit, it's simply money that must eventually be spent for charitable purposes in later years.

Large amounts of money can enter the organization, but it can never end exit. (Though, there are some loopholes, like admistator salaries)

There are more rules. I don't know the specifics of the US, but in most countries the activities of a non-profit have restrictions.

I agree. Becoming and staying a non-profit is harder than you'd think. The IRS's rules are vague and subjective. This is specifically what I'm talking about: "If unrelated business income comprises a 'substantial' portion of an exempt organization's income, loss of tax-exempt status may result" [1].

[1] https://www.hurwitassociates.com/taxation-of-unrelated-busin...

501(c)(3) status has nothing to do with operational profits. There are many entities that aren't losing money and still have 501(c)(3) status. That status just means the entity is not created to deliver profits to shareholders - like regular commercial company does - but it doesn't mean it has to burn money. It can very well have positive operational cash flow, it just can't redirect that cash flow to pay out the shareholders. I don't see how you conclude that "profits like this unrelated to their normal business" - any evidence substantiating this claim?

Well, reading the IRS guidelines on what qualifies as UBI, it seems like it might fall under that category, but I'm also not an expert, which is why I'm asking for a more qualified opinion. However, assuming it's UBI, it's pretty clear to me that having a large percentage of their income this year being UBI would be a red flag to the IRS.

IRS regulations say:

1. It is trade or business - sure, it's trade as in sale, so that matches.

2. It is regularly carried on - not really, there's only one .org domain so one can't regularly sell it.

3. It is not substantially related to furthering the exempt purpose of the organization - that one would be the toughest to prove, the purpose of the organization is "to promote the open development, evolution and use of the Internet for the benefit of all people throughout the world". Of course you can think that selling .org to a particular company may not benefit the world, but surely it's just your opinion, you can't prove that it has no relation to the original mission.

Also, using taxation as a tool in policy disagreements is a really bad idea. It is tempting to say "ah, so do this bad thing so we retaliate against you by attacking your tax status" but that's not what tax status is for. If it's a non-profit, it remains a non-profit even after it does bad thing, and whether it is a non-profit or not should not depend on whether we like what they're doing. Tax status is not a form of punishment or reward, at least it shouldn't be.

> 2. It is regularly carried on - not really, there's only one .org domain so one can't regularly sell it.

You're right. I misread #2 as the inverse so misunderstood what UBI was.

> 3. It is not substantially related to furthering the exempt purpose of the organization - that one would be the toughest to prove...

Kinda a moot point given #2, but the IRS elaborates (emphasis mine), "... only when the conduct of the business activities has causal relationship to achieving exempt purposes (_other than through the production of income_)"

The $1.1 billion isn't profit. They're selling an asset (the .org rights). That transaction should be entirely neutral in terms of profit/loss.

In what world are the majority of asset sales untaxed? Look at stocks, bonds, bitcoin, homes, art, gold, silver... All assets and all taxable upon realized gains and losses.

P&L is the basis for corporate income taxes. There are many other taxes, such as capital gain.

Nah.