Can a 501 (c) (3) non-profit entity be part or a division of an LLC?

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Can a 501 (c) (3) non-profit entity be part or a division of an LLC?

In other words, can the LLC act as a parent to the 501(c)(3)?

Asked on April 18, 2013 under Business Law, Pennsylvania

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

It depends on the state and whether IRS rules would allow this. The issue would be of profitability and how the money is accounted for in each account. As long as there is no commingling and one is not used as a shell for the other, there should be really no issues. Again, check with the IRS and your state tax attorney or accountant on licensure issues, registration issues, or whether you would need to register with the securities division of your state.


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