We are thinking of open a profit business to support a nonprifit business in Montana. Can you legally do that? We want to use the nonprofit part as a tax shelter
Alan K
Favorite Answer
First, a Sec 501(c)(3) organization must be organized and operated exclusively for charitable, religious, educational, etc. purposes. Any benefit to founders and members beyond reasonable compensation is inurement and will jeopardize your tax exempt status with the IRS. Montana non-profit law is subordinate to the IRS.
Your premise for forming such a tax exempt organization is flawed from the start.
Second, the entire operation is subject to corporates taxes. The worse case scenario would to be treat this a fraudulent, thus subject to criminal statutes with no statute of limitations.
This is how Jim and Tammi Baker got nailed.
random_man
You really would need to consult a tax advisor to get a good answer.
A for-profit business can deduct donations (within limits) to a 501-C3 entity, even if both corporations are controlled by the same people I think. If that's what you're asking.
Wal
it wouldnt work cause before any electronically traceable income leaves your profit business and goes into to your "non profit" it will already have been taxed by the govt like a convict getting pulled over on a highway and i highly doubt the irs will give you tax credits on such unless your spending more on non-profit public service than what you make which in that case will be self defeating unless being a charity is your true intention
?
The purpose of a nonprofit organization is to provide services to its members or to the public.
It is NOT a tax shelter so YOU don't have to pay taxes for the public services that YOU are only to happy to use.
What you plan is illegal.
STOP DOING IT.
You are a pig.