Subject: RE: Mozilla For Profit?
From: Brian Behlendorf <>
Date: Mon, 15 Aug 2005 21:27:08 -0700 (PDT)

On Mon, 15 Aug 2005, Chris Maeda wrote:
> It's not clear what happens when a non-profit entity reports pass-through
> income from a for-profit LLC.  It probably ends up paying tax on it at the
> corporate rate, which is precisely what you are trying to avoid when you set
> up an LLC.

No, sadly, corporate tax is paid on profits by the taxable sub - that's 
why it's called "taxable".  Profits made by the taxable sub can be kept in 
the bank to pay for future expenses or distributed as dividends to 
shareholders, as like other companies.  In this case, the dividends go to 
the Foundation.  Not as tax-efficient as money coming from charitable 
donations (which should go straight to the Foundation anyways) but it 
ensures we can comply with rules about what kinds of income 501c3 
organizations are allowed to have, such as the 33% individual donations 
rule.  By moving most of the expense line to the taxable sub, those 
expenses are paid pre-tax.