Merger under state law may result in a new entity or in one of the parties to the merger ceasing its existence. In either case, the IRS must determine whether the post-merger entity continues to be organized and operated for section 501(c)(3) purposes.

Accordingly, you should notify the IRS, by letter to EO Customer Account Services, of the merger, and submit copies of any amendments to your articles of organization or by-laws as part of the merger transaction. You may also wish to consider whether the merger will result in other adverse tax consequences, such as recognition of gains on assets transferred.

See an article on the effect of Internal Revenue Code section 337 and Treasury Regulation section 1.337(d)-4 on exempt organizations.

You may want to request a private letter ruling on the tax consequences of a merger.

Source: http://www.irs.gov/charities/article/0,,id=156421,00.html

Specific guidebooks on the "how to's" of nonprofit mergers can be found by clicking here!

TGCI Articles:
Making a Merger Go Smoothly for Nonprofit Workers

Which Organization Should Dissolve in a Merger?
Article covers three ways in which to handle the merging of nonprofit organizations.

A well-known example of a nonprofit merger occurred in 2000, when America's Second Harvest and Foodchain merged.