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Tax Status of LLC when the only Member is a Non-profit (501c3)

Our Non-Profit organization formed an LLC to provide work-training opportunities for our clients. Does the LLC share the same tax-free status as Non-Profit?



Ted Monohon
Title: VP -Finance / Controller
Company: Fantex
(VP -Finance / Controller, Fantex) |

The LLC might have reporting requirements at the state or Federal level, however, if it is a single member LLC, I believe it can be disregarded for filing purposes an therefore for tax purposes, all the activity is captured in at the owner (501(c)3) level. Be careful that the LLC isn't doing ny activities that might jepordize the tax exempt status of the parent corporation.

(Associate Vice President) |

Thank you very much for your input.

Gwen Griffith
Title: Partner
Company: Tonkon Torp
(Partner, Tonkon Torp) |

The single member LLC will be disregarded for tax purposes (unless you made an election to treat it as a corporation; let's assume you did not.) All the activity will be reported on the parent company's 990. The IRS recently clarified that donations/grants made to a single member LLC like yours will be treated for tax purposes as if they were made to the parent company. However, if the single member LLC has employees, it will need to get its own EIN and report accordingly. State and local laws vary significantly on the treatment of this structure, so check those closely. I echo Mr. Monohon's warning re activities at the LLC level.

(Associate Vice President) |

Thank you very much for your input.


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