What are the advantages of filing a non-profit corporation?
If your non-profit corporation is granted tax-exempt status under 501(c)(3) of the Tax Code, the corporation is exempt from federal corporate income taxes, on all ‘exempt function income’, and is subject to tax only on its ‘unrelated business income’. ‘Unrelated business income’ is income derived from activities that are not ‘directly related’ to the ‘exempt purpose’, and/or which compete with commercial enterprise. A 501(c)(3) non-profit organization is also eligible to receive ‘tax deductible’ contributions, donations and grants from both public and private sources. Individual donors can claim a federal income tax deduction of up to 50% of their ‘adjusted gross income’ for donations made to qualified 501(c)(3) organizations.
