Limited Liability Companies & Tax-Exempt Organizations | CPA REG Foundations

Limited liability companies and tax-exempt organizations are separate entity topics within REG Area V: Federal Taxation of Entities. In this CPA REG Foundations lesson, you’ll learn how an LLC’s federal tax classification depends on its number of members and elections, how major tax-exempt organization classifications differ, and how 501(c)(3) restrictions, public charities, private foundations, unrelated business taxable income, and reporting requirements work. Use this LLC classification framework: Single-member LLC + no election → Disregarded entity Multi-member LLC + no election → Partnership Form 8832 → C corporation taxation Valid Form 2553 → S corporation taxation Topics include: • Limited liability companies • State-law entity status vs. federal tax classification • Single-member LLCs • Multi-member LLCs • Disregarded entities • Partnership taxation • Schedule C, E, and F • Form 1065 • Schedule K-1 • Form 8832 • C corporation election • Form 2553 • S corporation election • Form 1120 and Form 1120S • State-law liability protection • Tax-exempt organizations • Section 501(c)(3) • Section 501(c)(4) • Section 501(c)(5) • Section 501(c)(6) • Section 501(c)(7) • Section 501(c)(19) • Charitable contribution deductibility • Private inurement • Political campaign intervention • Lobbying limitations • Public charities • Private foundations • Unrelated business taxable income • UBTI • Form 990 • Form 990-N • Form 990-T • Common REG Exam traps CHAPTERS 00:00 LLCs & Tax-Exempt Organizations Overview 01:20 LLC Federal Tax Classification 02:34 LLC Corporate Elections 03:37 LLC Classification Scenarios 04:18 Tax-Exempt Organization Types 05:27 Charitable Contribution Deductibility 06:20 Section 501(c)(3) Rules 07:28 Public Charities vs. Private Foundations 08:23 Unrelated Business Taxable Income 09:30 Form 990, 990-N & 990-T 10:26 Final Exam Framework Key concepts covered: • LLC federal tax classification • Disregarded entity • Partnership taxation • C corporation election • S corporation election • Form 8832 • Form 2553 • Tax-exempt organizations • Section 501(c)(3) • Public charities • Private foundations • UBTI • Form 990 • Form 990-T A key REG distinction is: State-law LLC status ≠ Federal tax classification An LLC can retain its state-law legal existence and liability protection while being treated as a disregarded entity, partnership, C corporation, or S corporation for federal tax purposes. For LLC questions, use this decision sequence: Member Count → Apply Default Classification → Check for Election → Determine Federal Tax Treatment For tax-exempt organizations, keep another important distinction in mind: Tax-exempt organization ≠ Automatically deductible contribution Contributions to qualifying 501(c)(3) organizations are generally deductible subject to applicable limitations, while contributions to other exempt organizations are not automatically charitable deductions. Within the 501(c)(3) category, remember: Public charity → Generally broader public support Private foundation → Generally more concentrated private funding and additional restrictions For unrelated business taxable income, use the three-part test: Trade or Business Regularly Conducted Not Substantially Related to the Exempt Purpose = Potential UBTI Generating UBTI can create tax on that unrelated income without automatically eliminating the organization’s overall tax-exempt status. Reporting framework: Form 990 → Principal annual information return for many exempt organizations Form 990-N → Simplified electronic filing generally available to qualifying smaller organizations Form 990-T → Used for unrelated business income when applicable filing requirements are met Memory rule: LLC → Members → Default → Election Tax-Exempt Organization → Classification → Restrictions → UBTI → Reporting After watching, reinforce these concepts with related multiple-choice questions in your CPA review course. Complete REG exam prep course:    • CPA BAR Exam Prep Course | Complete BAR St...   CPA Explained AI is an independent educational platform and is not affiliated with, endorsed by, or sponsored by the AICPA, NASBA, or any CPA review course provider. #CPAExam #CPAREG #LLC #TaxExemptOrganizations