exempt organization return

[JenMO]

Exempt organization (MOM) was formed to provide affordable maternity and delivery benefits. BabiesLLC was formed and runs it's business . MOM is the sole member of BabiesLLC. The another entity was formed, TwinsLLC and MOM is the single member of this LLC. HOw is the return filed. Because MOM is an exempt organization, does that make BabiesLLC and TwinsLLC exempt, too. Looking for a little guidance from preparers or written material

[Uncle Sam]

Looks like MOM should be the exempt organization. Does it have the 501(c)(3) exemption from IRS, and file an annual 990 (or 990-EZ) with IRS and applicable state exempt form with Attorney General?
What you're describing violates the terms of an exempt organization - having a financial interest in a for profit entity. It appears that both LLC entities are for-profit entities.
In order for an entity to be treated as tax exempt it must complete Form 1023 and filing app fee Form 8718 and get the official IRS approval. From what your post states, it doesn't appear it has met all the requirements.

[JenMO]

Both the LLCs are carrying on the same services as the 501C3. MOM does have the exemption and has been filing the 990 Can a 501c3 entity have LLCs under it carrying out the same purpose of providing health services at an affordable price.

[Uncle Sam]

Look at MOM's Articles of Incorporation to see if it's permissible. Do the LLC's already have 501(c)(3) exemption from IRS?
There's a question on the 990 form asking (Yes/No) whether or not the organization has changed any activities not already reported to the IRS, and you need to provide details if Yes. So you might need to contact IRS Exempt Unit and inform them of this and request authorization to do so.

[Toobusy]

Uncle Sam is right! LLC is "For Profit" and do not meet the qualification for an Exempt organization. Regardless of what she has been filing such as form 990, you need to look a copy of Form 1023, or go to IRS website and check to see if either MOM and TwinsLLC are tax exempt. If so, the LLC status needs to be removed. If not, all income that the business receive is to reported on Schedule C, and the profit after deductions is taxable.