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Do I qualify for 501(C) If I register brother and sister corporations (for-profit/non-profit corporations in tandem) in Nevada?

Las Vegas, NV |

I'm thinking about registering a non-profit corporation to be linked to my for-profit corporation. I would like to have both of these corporations as blended structures for tax purposes. Firstly, I'm not sure If I can do that and secondly, If I can have these to corporations to be linked together, what would be the tax laws around them? I would appreciate any help or pointing in this direction.

Attorney Answers 3


Nevada recognizes non-profit corporations and for profit corporations. However, a 501(c)(3) determination is a federal tax exemption for which you must separately apply. A merger or comingling of a for-profit business with a non-profit entity will result in the corporation losing its federal exemption and likely it's state non-profit status. You may have good reason for the structure proposed by your question, but this can be complex and is not a DIY project. You should consult an attorney.

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"Linking" -- or having some formal arrangement between NFPs and for-profits -- is relatively common but highly complicated. For example, NFPs aren't really "owned" by anyone, so it's impossible to structure an NFP as owned by a for-profit, or as owned by the same shareholders (i.e., brother-sister). On the other hand, an NFP can own a for-profit. In most instances, the "link" is established through common control (overlapping boards) or some JV-type arrangement. There are a sub-set of tax attorneys who specialize in this unique area of law (complex non-profit structuring). They are worth every penny.

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This is complex and requires a lawyer that understands the tax law for non-profit corporations. You most likely do not want to "link" these entities. Setting up the non profit is time consuming because you must file a Form 1023 application which has many requirements (such as a 5 year budget projection.)

I have provided a checklist for forming a non profit corporation in the links below.

Please get a good tax attorney!

Ron Cappuccio

If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.

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