Nonprofit Law/501(c)(3) Members

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Question
Can a state "non-profit" entity that is NOT tax-exempt under federal law be the sole member of a 501(c)(3) wholly owned subsidiary corporation?

Answer
Individuals are not tax-exempt either and the IRS, therefore, would treat the situation the same when there is a sole member who is an individual and a sole member that is a nonprofit corporation or nonprofit unincorporated association (what you referred to as a state "non-profit). By "subsidiary" it appears that you are referring to a subsidiary of another organization, one that has already qualified as a 501(c)(3) organization.  A 501(c)(3) organization may set up a subsidiary, and that subsidiary may have only one member, and that member can be an individual or a non-exempt entity, but that does not mean that the IRS would be treating the subsidiary automatically as exempt.  It will decide using the same reasoning it uses when determining whether any new organization is to be accorded 501(c)(3) organization status.

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information. is the sole member of a  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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