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If someone wanted to spend a large amount of a company's profit on charitable activities what would be the preferred way to set up that company? Is there a strong preference between choosing an LLC or an S-corp? |
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Whether it is an LLC taxed as a disregarded entity or as a partnership, (if multiple members), or an S Corporation, charitable contributions are going to pass through to the member(s) or shareholder(s) and get deducted on their personal tax returns subject to limitations at the individual level. You want to avoid being taxed as a C Corporation because deductions are limited to 10% of the corporation's taxable income. Other than avoiding C Corporations, the short answer is there is no preference that I can think of. |
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It might be worth talking to a tax firm that specializes in Not-For-Profit tax entities and seeing if there is an opportunity there to get the best tax advantages out of the situation. |
