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Nonprofit Law/foreign non-profit company owned by US entity


Q: is a non-US based, not-for-profit entity that is owned by a US entity (California LLC) eligible for the tax exempt staus?

More facts: The non-US entity is a private organization based in brazil, created to promote "compliance" with the local regulatory requirments for electronic communication businesses and is not registered as a non-profit organization in the U.S. but intends to claim a tax exemption status on its US parent's tax return Form 1065 for Partnership.  Thank you

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. See starting on the bottom of page 4 under the heading "2. Foreign Organizations May Qualify for IRC 501(c)(3) Status" a quote from an
Earlier Revenue Ruling, "The fact that an organization has been formed under foreign law will not preclude its qualification as an exempt organization under section 501(a) of the Internal Revenue Code of 1954 if it meets the tests for exemption under that section."

I doubt that the organization meets the tests, which are called the organizational test and the operational test.  As to the organizational test - the IRS discusses that starting on page 24 of under the heading "Organizational test". It must have the
required clauses in the organizational document. Samples start on page 71

Operationally, it would not be able to be giving any benefits to a for-profit entity (like the California LLC).  If you want me to give,m though, a detailed analysis regarding this particular situation I would need to spend a substantial amount of time looking at the organizational documents and it operation and that is beyond the scope of my offer of free services for general questions.  If you want to hire me, send me an email directly to my email address below and I will quote you my fees.

Harvey Mechanic
Attorney at Law

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.

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. 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 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 "" without the quotes and then add your search terms before hitting enter.


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.


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

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

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