IRS Provides Long-Awaited Formal Guidance on 501(c)(3) LLCs--BS&K

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Under Notice 2021-56, the IRS indicates that it will issue a favorable 501(c)(3) determination letter to an LLC if, in addition to satisfying the general requirements of 501(c)(3), it satisfies the following requirements in both its articles of organization and operating agreement:

Inclusion of provisions requiring that each member of the LLC be either (i) an organization described in Code Section 501(c)(3) or (ii) a governmental unit (or wholly-owned instrumentality of such a governmental unit). 
Inclusion of express charitable purposes and charitable dissolution provisions in compliance with Treasury Regulation Section 1.501(c)(3)-1(b)(1) and (4).
If the LLC is a private foundation, inclusion of the express Chapter 42 compliance provisions described in Code Section 508(e)(1).
Establishment of an acceptable contingency plan in the event that one or more members cease to be Code Section 501(c)(3) organizations or governmental units.
Representation that all provisions in its articles of organization and operating agreement are consistent with applicable state LLC law and are legally enforceable.
Importantly, this new guidance does not impact LLCs currently recognized as described in Code Section 501(c)(3).

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This page contains a single entry by Leonard E. Sienko, Jr. published on November 16, 2021 4:25 PM.

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