Charitable Contributions and Single Member LLCs

A recent article by the Journal of Accountancy reported on the Internal Revenue Service decision regarding charitable contributions made to a single member LLC (SMLLC) wholly owned by a US charity. The article explains that some charities may prefer to create a SMLLC to hold gifts of property or real estate for liability issues, but that created some confusion as to the tax deductibility of contributions to the SMLLC. Notice 2012-52 clarified that contributions made to a SMLLC that is wholly owned and controlled by the US charity will be treated as if made directly to the US charity. To properly substantiate contributions, the donor should request a letter from the charity stating that the SMLLC is wholly owned and controlled by the US charity and treated by the US charity as a disregarded entity.