TP organized as non-profit LLC, filed SS4 and obtained EIN. TP checked non-profit on SS4, but does plan to request determination letter. Does TP file 1120?
Best
Bill
TP organized as non-profit LLC
According to Bill Lentz <blentz1950@gmail.com>:
TP organized as non-profit LLC
There is no such thing as a non-profit LLC. You can be an LLC, or you
can be a not-for-profit corporation, but you have to be one or the
other. I have set up both, and they are different.
See https://www.irs.gov/charities-non-profits/charitable-organizations/organizational-test-internal-revenue-code-section-501c3
I would suggest the taxpayer close down the LLC, set up the not-for-profit corporation he should have set up in the first place, and most importantly get competent tax advice so he does it correctly.
One sort-of exception is that if you have an LLC where the member or
member are existings not-for-profit corporation, the LLC can inherit
the parents' tax exemption (I've been involved in that too), but it
doesn't sound like that's the situation here.
TP organized as non-profit LLC, filed SS4 and obtained EIN. TP
checked non-profit on SS4, but does plan to request determination
letter. Does TP file 1120?
One sort-of exception is that if you have an LLC where the member orNot so fast:
members are existings not-for-profit corporation, the LLC can inherit
the parents' tax exemption (I've been involved in that too), but it
doesn't sound like that's the situation here.
https://www.findlaw.com/smallbusiness/starting-a-business/can-an-llc-be-a-nonprofit-.html
https://www.upcounsel.com/can-a-non-profit-be-an-llc
When a corporation or trust is set up as a nonprofit, it files IRS Form
990 and/or 990-T, even if it hasn't applied for or gotten IRS approval.
On the other hand John is right, for the most part, unless allowed by
state law, an LLC can't be a nonprofit.
On 8/9/2022 9:09 PM, John Levine wrote:
According to Bill Lentz <blentz1950@gmail.com>:
TP organized as non-profit LLC
There is no such thing as a non-profit LLC. You can be an LLC, or you
can be a not-for-profit corporation, but you have to be one or the
other. I have set up both, and they are different.
See >>https://www.irs.gov/charities-non-profits/charitable-organizations/organizational-test-internal-revenue-code-section-501c3
I would suggest the taxpayer close down the LLC, set up the not-for-profit >>corporation he should have set up in the first place, and most importantly >>get competent tax advice so he does it correctly.
One sort-of exception is that if you have an LLC where the member or
member are existings not-for-profit corporation, the LLC can inherit
the parents' tax exemption (I've been involved in that too), but it
doesn't sound like that's the situation here.
Not so fast:
https://www.findlaw.com/smallbusiness/starting-a-business/can-an-llc-be-a-nonprofit-.html
https://www.upcounsel.com/can-a-non-profit-be-an-llc
If under state law an individual or business corporation is
allowed to be a member of a nonprofit LLC, I just don't see how it
would be determined to be an exempt organization under federal tax
law.
"Adam H. Kerman" <ahk@chinet.com> wrote:
If under state law an individual or business corporation is
allowed to be a member of a nonprofit LLC, I just don't see how it
would be determined to be an exempt organization under federal tax
law.
Individuals can be members of nonprofits too.
For an LLC to be a nonprofit state law would prohibit the members from
having any rights other than to select the managers.
The Articles of Organization and
Operating Agreement would also have to be consistent with being a
nonprofit. I don't know for certain if any states have done that, but
I have a vague recollection of hearing about one state that provided
that possibility.
"Adam H. Kerman" <ahk@chinet.com> wrote:
If under state law an individual or business corporation is
allowed to be a member of a nonprofit LLC, I just don't see how it
would be determined to be an exempt organization under federal tax
law.
Individuals can be members of nonprofits too. For an LLC to be a
nonprofit state law would prohibit the members from having any rights
other than to select the managers. The Articles of Organization and >Operating Agreement would also have to be consistent with being a
nonprofit. I don't know for certain if any states have done that, but
I have a vague recollection of hearing about one state that provided
that possibility.
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