Finance

Have Finance Questions? Ask a Financial Expert Online.

Ask an Expert,
Get an Answer ASAP!

Finance

If two people are owners of a large California S Corp and

Customer Question
they also own a 503...
if two people are owners of a large California S Corp and they also own a 503 1c charity Can the S corp donate to the charity or should they be taking a distribution and making that donation themselves?Thank you
Submitted: 1 year ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Answered in 34 minutes by:
9/1/2016
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12,876
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. I can help. My name's Lane.

...

First of all (just a technicality, but it might be good to know) 501(c)(3)'s aren't owned by individuals. They are owned by the public ... This is why, when a Not for Profit is dissolved, any remaining funds must be given to ANOTHER charity.

...

However, you are likely on the board, or officers, which makes you what IRS will call a related party.

...

So any contributions made by the S-Corp, or by you as individuals, will likely be HIGLY scrutinized. THe form (whether the S-Corp makes the contribution and it lowers the taxable income coming to you on the K-1 ... or whether you take the deduction on your 1040 and it lowers your personal taxable income) doesn't really matter.

...

What DOES matter is whether IRS looks at this as income shifting (under the related party rules), creating a deduction for you by using something else over which you have control.,

...

OR

...

Whether this could create what's called private enurement (sometimes called an excess benefit transaction) on the non profit side, which can jeopardize the non-profit status.

...

As along as the funds pass directly through in a way that doesn't benefit you personally, For example making a restricted donation that requires the money go DIRECTLY to a certain use by non-profit that's a part of the non-profit's mission, such as buying clothes for the needy, or to 100% to fund a grant to another charity that further's YOUR non-profit's cause as well, you SHOULD be fine.

...

But anything there is this much overlapping control, (IF you are audited) you'll want to document well.

...

There are some limits for S-Corps, that, again, mirror the limits for individuals:

...

An S corporation qualifies for the same charitable deductions that apply to individuals. The corporation should make the contribution from its own accounts and keep receipts. Generally, allowable deductions cover contributions to religious organizations, governments, non-profit schools and hospitals, war veterans’ groups, and any organization able to accept tax-deductible contributions.

...

(The corporation can’t deduct contributions to most foreign organizations, or to social clubs, sports leagues, lobbyists, profit-making organizations, non-student individuals and political groups.)

...

...

The Internal Revenue Service limits the total of all charitable contributions to 50 percent of an S corporation’s adjusted gross income, with some variations in specific cases.

...

Just as with individual donations, The 50-percent deduction limit applies to most charitable organizations, but certain organizations have a 30-percent limit, including veterans’ organizations, fraternal societies, live-in students and nonprofit cemeteries.

...

“Capital gain property,” which is any property that would have produced a capital gain if it had been sold instead of donated, has a deduction limit of 20 percent or 30 percent, depending on the recipient.

...

Again, given that you are the only owners, and you each intend to make the same amount of contributoin, the form that this takes (S-Corp vs individual) doesn't make a difference. But HOW that's handled, whether the donation could be perceived in any way as accruing back to you, because of your control of the organzation, is critical.

...

I would seriously look at (1) making a restricted donation to be used in a way that can in now way be perceived as your personally benefitting, OR even (2) making the contribution to a charity who's mission aligns well with your non-profit's mission.

...

This piece is still the seminal piece in looking at private enurement: https://www.irs.gov/pub/irs-tege/eotopicc90.pdf

...

Please let me know if you have questions at all.

...

lane

...

...

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Ask Your Own Finance Question
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago

P.S. meant to give you this as well, ... a good overvie of "restricted donations."

...

https://nonprofitsassistancefund.org/resources/item/managing-restricted-funds

...

Please let me know if you have any questions at all, before rating me

...

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

Otherwise I’m working for no crediting at all here

...

Thank you!

Lane

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Ask Your Own Finance Question
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12,876
12,876 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,608 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,218 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,919 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
We have a situation with an irrevocable trust. The bank is a
Hello.We have a situation with an irrevocable trust. The bank is a co-trustee and national.. The money has been in a money market account that has been FDIC insured. The bank is dissolving these and n… read more
TaxAttorneytoHelp
TaxAttorneytoHelp
Owner
Doctoral Degree
2,542 satisfied customers
In a suburb 30 miles north of New York City what is the
In a suburb 30 miles north of New York City what is the going rate or reasonable rate for commercial office space annual lease increases? not including any TAX/CAM increases. I am negotiating a lease … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,483 satisfied customers
I'm trying to fill out a W4 and i'm working on the 2
Hi, I'm trying to fill out a W4 and i'm working on the 2 earners/ multiple job section. my total withholding needed is $5050. It then says to divide that by the number of pay periods left in the year.… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
I was wondering if I could talk to a CPA online? I need to
I was wondering if I could talk to a CPA online? JA: The Accountant will know how to help. Please tell me more, so we can help you best. Customer: I need to conduct an interview with a CPA JA: Is ther… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,220 satisfied customers
I own a Partnership Business with my brother in law and in
I own a Partnership Business with my brother in law and in August he Wanted out. We wrote up a contract agreeing to remove his name from the business and agreed to continue to pay on his personal cred… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Husband and wife submitted a joint tax return. However
This question is for Lev. Husband and wife submitted a joint tax return. However husband in a year prior to his death opened an art business with him as a painter. Thus, he attached schedule C to the … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have done quickbooks for years. We are trying to go into a
I have done quickbooks for years. We are trying to go into a new partnership and we do oilfield work. The job we do is billed at a daily rate of about 5800.00 per day. The new partners want to know wh… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
A person was an artist fro 10 years and over those years he
A person was an artist fro 10 years and over those years he painted a large number of paintings. One year prior to his death he decided to be a professional artist. He filed a Schedule C for that year… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I recently got divorced. As part of the divorce decree I was
I recently got divorced. As part of the divorce decree I was to make a one time payment of 10k to my wife that was to represent her equity in the house. I was unable to do a cash out refi because we d… read more
abci168
abci168
Principal
27 satisfied customers
If I have to issue a 1099 to someone that will apply for
If I have to issue a 1099 to someone that will apply for ITIN number, can I issue the 1099 with no social security or ITIN number?… read more
socrateaser
socrateaser
1,031 satisfied customers
I own a company with the stock symbol AGNC. I am looking for
I own a company with the stock symbol AGNC. I am looking for advice on whether or not this stock has a high probability of bankruptcy. I've owned it for over 6 years and currently have a paper loss. I… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
What would the best life insurance policy be and my partner
What would the best life insurance policy be it's me and my partner his earning potential ya about 150k per year mine is about 40k . We are both in our late 30s with little savings. We still rent and … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,483 satisfied customers
I am 70 years old taking care of my mother who is 88. I have
My name is***** am 70 years old taking care of my mother who is 88. I have a mortgage of 50,000.00. I live in a very rural town of 320 residents. My mother and I probably will not live long enough to … read more
Curtis Mathews
Curtis Mathews
President
MBA
0 satisfied customers
I want to know how the Tax Reform Bill will affect the way
I want to know how the Tax Reform Bill will affect the way gambling winnings are dealt with. Now, you can write off your losses up to your winnings. I was told that the tax reform does away with that.… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
1. Should the option prices change when a company
1. Should the option prices change when a company surprisingly eliminates its dividend but its share price stays the same?2. Give two reasons why "short interest rebate" would be a negative interest r… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
I have a film production company LLC registered in Florida.
I have a film production company LLC registered in Florida. However, my husband and I just moved to Colorado. I'm putting together a co-production deal with a company out of Indiana. We'll be doing th… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,483 satisfied customers
I have set up an llc for the sole purpose of owning shares
I have set up an llc for the sole purpose of owning shares in a C-corp. The C-corp currently has no business activity and a value based on 44 million shares and par value of 0.00001$/share. The C-corp… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am receiving a payment from my prior employment disability
I am receiving a payment from my prior employment disability insurance. Will I be taxed for that? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,483 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x