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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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I currently own two businesses--both Corporations. My second

Resolved Question:

I currently own two businesses--both Corporations. My second business should be filed with the IRS as a 501c(3) business but I don't have the funds to obtain that classification yet. Anyway, since the second business does not have any funding to perform the tasks that it does, my first business pays for any expenses it incurs.

How do I record these expenses on my first business' 2011 tax filing? Do I record the expenses as a donation? An investment?

thank you for your quick response,
Submitted: 5 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 5 years ago.
Thank you for your question. I happen to be a New Jersey licensed expert and will do my best to assist you.

If you are setting up the second business as a non-profit, it cannot be an "investment" since a "for-profit" cannot own, control, or invest for profit into the other entity. Therefore it would be a donation rather than an investment.

Good luck.
Customer: replied 5 years ago.
But currently the second business is not a non-profit so I still make a donation to it?
Expert:  Dimitry K., Esq. replied 5 years ago.
Thank you for your follow-up.

Sure you can, but it is not a qualified donation as there is nothing to donate against. It is absolutely not an investment UNLESS you wish to file taxes and claim that it was initially going to be set up as a "for-profit" entity, and in 2012 and on subsequent taxes you changed your mind to turn it into a non-profit.

Good luck.
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