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Single Member LLC’s gets Charitable Contribution Deduction

  Sanjiv Gupta CPA  Published 

Before getting into the details of Single and dual member LLC, one must be sure about the facts that constitute LLC. The Limited Liability Companies or enterprise has the unique capability of blending corporate elements and partnership structures whereby one can reap rich profits. In this form, the company is legal where both the partners enjoy limited liability. The prior motive of LLC’s may not be entirely profit-oriented, it may be a partnership for other social causes as well.

Based on this there was a recent announcement from the IRS that any contribution to a national LLC which is totally owned and managed by an IRC organization shall be treated like any other that has been made in the name of charity. There is a condition though, that the LLC is not liable for taxation as any other corporation.

The IRS although had been earlier provided with guidance to conduct both public charities and private foundations in case of tax treatment for operating through single-member LLC. The release of a Notice 2012 – 52 which came to the fore only after 31st July 2012 acted as the initial guide for both the corporate and individual contributors which stood tantamount to the deductibility of various contributions. If left unaddressed or not the treatment of tax to an individual member, or “disregarded entity” these limited liability companies are organized in a place of the foreign jurisdiction.


Limited Liability Company Advantages

The advantages of a limited liability company are  as follows

  • They have the flexibility to choose and get elected to be taxed as a single owner, partnership firm, hence a great deal of flexibility is enjoyed by an LLC
  •  Member of an LLC are liable to enjoy the distributive share of profit and loss, income or expenditure and so there is a sense of moderation in the practices of an LLC.
  • Members are greatly protected compared to other firms as per the state corporate laws.
  • There is hardly much paperwork or recordkeeping one has to get involved in LLC.
  • Only one person can also set up an LLC.

The advantages are aplenty and one only needs to arm oneself with full knowledge to deal with such matters intelligently and successfully.