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A new type of hybrid entity was created with the enactment of the "low-profit, limited liability company" (L3C) legislation by Vermont in 2008. The L3C format is currently authorized in six other jurisdictions and bills have been introduced in many other states. A L3C is a new form of limited liability company − a hybrid of a non-profit and for-profit. The L3C is not a non-profit, rather it is a for-profit venture that under its governing instruments has a primary goal of performing a socially beneficial purpose, not making a large return on investment. Under the L3C format, a private foundation and for-profit investors can have ownership and management rights in the L3C. A principal reason for the L3C format is to qualify the new entity as a program-related investment (PRI) under Section 4944 of the Internal Revenue Code. This permits a private foundation to make an investment with a socially beneficial purpose that is consistent with and furthers the foundation's charitable purpose, and, thereby, attract more foundation funds to socially-beneficial, for-profit projects. What is covered: This 90-minute Webinar will explore the formation and taxation of L3Cs, as well as pending state legislation, including: - The creation of the L3C format
- How to create a L3C
- Conversion of existing entity vs. creation of new entity
- Jurisdictions with legislation expressly permitting a L3C
- Jurisdictions with legislation pending to expressly permit a L3C
- PRIs
- How to avoid excise taxes under the Internal Revenue Code
- How state law has addressed this issue
- Risks v. Benefits
- What is the financial upside
- How state legislation has addressed PRI qualification
- How the IRS looks at L3Cs
- Taxation
Education Objectives: Participants will learn: - How and where to form a L3C
- How private foundations can further their exempt goals while investing in socially beneficial endeavors
- How to steer clear of private foundation excise taxes
- How the L3C and its investors will be taxed
- Which jurisdictions have pending legislation to permit the L3C
Recorded on October 27, 2009, this event is available on CD for purchase.
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