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Single member LLC exempt from taxation under 23701(h)

February 14, 2017 • Michael Berry • Log In to Post Comments

I represent a single member LLC that is exempt under 23701(h) and consult with another CPA who also has a single member LLC exempt under the same section.

Questions as to filing requirements and fees:

1) I am under the impression I would need to file a 568.

2) I know this type of LLC is not subject to the 800 annual fee.  Can you advise if they are subject to gross receipts fee? In one case, they are getting rents;  in another case, they received a contribution of property by a donor.

Appreciate any input.

 

Mike Berry

 


Comments

Yes you must file Form 568 and you must pay both the $800 and the gross receipts fee based on income from Califorinia sources.

Hi Lynn:

Thanks for the quick response.  On the point about a single member LLC that has received tax exempt status under 23701(h), I am seeing something different in Form 3522 instructions as it relates to the 800 annual fee.  Under Who Must Pay the Annual Fee, 2cd paragraph- it states- for taxable years after 2003, an LLC described in IRC 501(c)(2) or (25) and California Revenue Section 23701(h) and (x) is exempt form the annual tax.

Your thoughts on the above.

Also, to clarify one other matter- assuming that such an organization is subject to the gross receitps tax, would a chartitable contribution be considered as part of gross receipts.  In one instance I am involved in, such an organization received a property valued at several million dollars from a donor (or perhaps donation went to single member 501(c)(3) orgnaization who transferred such property to single member LLC.

Appreciate any thougths.

Michael Berry

 

 

 

 

I"m sorry I'm not an expert on exempt organzaitons. You might want to contact the FTB's exempt org group or use Ask the Legal Expert function.

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