The IRS has clarified that contributions to a single member LLC, owned by a charity, are made to the Charity. The IRS formally recognizes the disregarded status of single member LLCs in the charitable organization context, consistent with the treatment of these single member LLC disregarded entities.
IRS Notice 2012-52.
The IRS disallowed Section 162 ordinary and necessary business deductions to a medical marijuana dispensary authorized under California state law. Under section 280E, businesses deductions are disallowed when the taxpayer is engaged in the trafficking of controlled substances. Even if legal under state law, the court disallowed the deductions because the activity is illegal under federal law, which is contemplated by Section 280E. Olive V. Commissioner, 139 TC 2, August 2, 2012.
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