Jay A. Rose


A Professional Law Corporation

21031 Ventura Boulevard, Suite 523
Woodland Hills, CA 91364
Telephone: 818.932.0200
Toll Free: 888.TRUST4U
Fax: 818.932.0205

For more information about
Life & Estate Planning, visit www.trust4u.com.

Tax Exempt Organizations

     All sorts of groups, from artists and musicians to people active in education, health and community services wish to operate as nonprofit (or not-for-profit) corporations. Often the reason for doing this is simple -- nonprofit status is usually a requirement for obtaining funds from government agencies and private foundations. Obtaining grants, however, is not the only reason to incorporate. Here, we discuss two additional important benefits of forming a nonprofit -- tax-exempt status and personal liability protection.
     In addition to qualifying for public and private grant money, most nonprofit groups seek nonprofit corporate status to obtain exemptions from federal and state income taxes. The most common federal tax exemption for nonprofits comes from Section 501(c)(3) of the Internal Revenue Code, which is why nonprofits are sometimes called 501(c)(3) corporations.
     If your group obtains tax-exempt status, not only is it free from paying taxes on all income from activities related to its nonprofit purpose, but people and organizations that donate to the nonprofit can take a tax deduction for their contributions.   Furthermore, if you set up a tax exempt corporation as part of your estate plan, all sums donated by you from your trust or will are fully deductible from your taxable estate for estate tax purposes.
     Forming a nonprofit corporation normally protects the directors, officers and members of the nonprofit from personal liability for the corporation's debts and other obligations. Called "limited liability," this shield ensures that anyone who obtains a judgment against the nonprofit can reach only the assets of the corporation, not the bank accounts, houses or other property owned by the individuals who manage, work for or participate in the business.
     We at the Law Offices of Jay A. Rose have set up numerous Tax Exempt Nonprofit Corporations.  Although obtaining approval from the IRS is a daunting task, we help those seeking this type of organization to navigate the waters of state and federal regulations.

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This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice or the formation of a lawyer/client relationship. Persons accessing this site are encouraged to seek independent counsel for advice regarding their individual legal issues.

Copyright 2002 by Jay A. Rose. All rights reserved.