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Are donor contributions made to non-profit entities eligible for tax exemptions? Or, can a PLCC convert to become a non-profit entity? Tax exemptions are synonymous to non-profit entities. These entities as the name suggests do not work for profits and are typically, certified by the IRS to be and operate as such. There are many aspects and considerations which go into qualifying for tax exemption. There may also be an interplay of rules which one needs to be aware of for the tax exemption feature to be applicable. This is where the knowledge of online law Experts comes in handy.
Read below where Experts have answered a few questions about tax exemption.
If the current company is exempted from tax, any income earned through chartering buses for profit would make that income taxable. If this happens, the bus company would lose its tax exempt status as it has engaged in an income producing activity. However, there may be a few exceptions to this rule. If the bus company is a tax exempt organization, income derived from its charters would need to negligible or a minor part of its overall revenue. An organization faces a risk of losing its status only if there was sufficient taxable income in any one year and once this happens, the status cannot be taken up in the following year. Therefore, to maintain its tax exempt status, the guidelines of the Internal Revenue Code need to be met each year and to do so, judicial planning and forecast must be done wherein, taxable income does not go above a certain level in subsequent years.
When the IRS approves a timely filed exemption application, the tax exempt status is recognized retrospectively to the date the organization was created. If the organization ultimately qualifies for exemption during the period in which the contribution was made, it becomes tax-deductible by the donor. Alternatively, if the organization does not qualify for exemption, the contribution will not be tax deductible. Another important point to be noted is that a nonprofit corporation status does not automatically provide the donors the right to deduct contributions.
Case Details: The proceeds will be donated to charities after expenses are met.
If the proceeds would be used exclusively for charitable purposes, there may not be a need to classify as a non-profit entity. This is because obtaining a tax exempt status can be cumbersome as you need to file accordingly with the IRS and also establish that the purpose is solely charitable. This can take time and effort. Therefore, it may be a good idea to begin as a 'for profit' business and understand a bit about how it works. In the meantime, charitable contributions can continue to be made with the process being less cumbersome than a non-profit venture.
Case Details: Intention is to create a corporate structure that can be used to allow nurses, social workers, physical and occupational therapists to practice as a group.
Ideally, it is possible to have a PLLC or even a traditional LLC to operate as a tax exempt or non-profit entity although this may not be as common as typical non-profits which use the corporate form or operate under the corporate umbrella. The reason for this is due to the nature of non-profits as compared to general purpose LLCs which are primarily created to generate profits for investors or members. However, in this particular scenario, the complexities of obtaining non-profit status through the IRS coupled with the insurance and liability issues of the medical field can make the task more challenging. It may be a good idea to retain the services of a good, local legal counsel to help in drafting agreements, business plans, business models, and so on.
This is possible, however, there may be a likeliness of creating a tax liability in a tax exempt non-profit organization. This would arise while structuring the use of assets from a non-profit into a 'for profit' enterprise, subsidiary or lease agreement. Since this becomes primarily an accounting issue, you need to ensure that the non-profit's tax exempt status is not challenged. To do this, engage a qualified CPA or accountant with experience dealing with non-profits to provide proper accounting options for the use of assets from the non-profit entity.
Case Details: Parent is a green card holder and children are U.S. citizens living in the U.S.
If the property was sold overseas the seller has to pay the applicable taxes as required by the foreign country. After this, the net proceeds of the sale can be gifted to the children in one of the two ways. An annual gift tax exemption of $14,000 per child is available each year. Additionally, the parent also has a lifetime gift tax exemption up to $5.4 million and a portion of this lifetime tax exemption can be used to transfer the proceeds without incurring gift taxes.
There are times when you are likely to get misdirected or misinformed regarding tax exemption related matters. Without having the right information and input, it is easy to falter or lose out on the benefit or incur unnecessary tax burdens. To ask specific tax exemption related questions, contact verified Experts online. Experts online provide quick, economical and professional opinions and information from the comfort of your home.
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