Invoice paid for 501(c)3 as donation

[numberkruncher]

Sub-S corp with "affiliated 501(c)3" paid large legal invoice for services setting up charity. Sole shareholder wishes to claim expense as charitable donation.

I'm concerned. Is this common in corporate world? Am I being an alarmist reading this as a hand-in-glove donation?

Please, please advise and discuss.

Thanks
NK

[Uncle Sam]

Invoice paid by corp for non-corp expense

I can't see where that's deductible by shareholder.
What it really is, is an advance for the 501c3 that should eventually be
paid back by the 501c3

[numberkruncher]

Invoice paid by corp for non-corp expense

I can't see where that's deductible by shareholder.
What it really is, is an advance for the 501c3 that should eventually be
paid back by the 501c3

Oh...now THAT makes sense.
If I understand, no activity takes place in the charity until it has enough funds to repay the advance. Correct?
The expense could then be reported by the 501(c)3.

Right now, the shareholder can claim neither the expense in the "for profit", nor any kind of donation to the 501(c)3. Correct?

I really appreciate your answer.

NK

[JohnH]

As the 501(c)3 receives contributions he could take the reimbursement, then donate the same amount back if he wished.
If his intent is to forego reimbursement but get a tax deduction, that will work just as well.

[Gary2]

I must be missing something. What makes it an advance, with any expectation of being repaid?

Are people assuming that the fees are for creating the organizational documents? If so, I guess there's a chicken and egg situation that requires that sort of treatment. But having been on my share of small non-profits, you'd be surprised how often they start out with some boilerplate articles of association, which can be enough to pass IRS muster and qualify for 501c3 (remember, no application required if annual gross receipts are under $5K), and then get the attorney involved.

If you do treat it as a loan, then once the organization is approved, there shouldn't be any reason why the individual (or in this case, S-Corp), couldn't immediately donate the appropriate amount, which is then used to repay the loan.