which are similar to California flexible purpose corporations.
The flexible purpose corporation is a sort of benefit corporation
lite: the flexible purpose corporation enabling statute merely requires
Still, since the flexible purpose corporation form became available at
corporation, the flexible purpose corporation, or the other forms in the
Since benefit corporations and flexible purpose corporations are formed under existing state corporation laws while L3Cs are formed under existing state limited liability company laws, and since these state law differences generally lead to somewhat different federal tax treatments, it is best to consider them separately.
Both benefit corporations and flexible purpose corporations are formed under the corporation law of their respective states, although with the special provisions noted previously.
141) While it is certainly possible for benefit corporations and flexible purpose corporations to meet these requirements in theory, in practice it will not be possible to do so if such entities have different categories of investors with different rights, or if one or more investors are not eligible S corporation shareholders.
149) L3Cs, like limited liability companies generally, can, however, also choose to be taxed as corporations (C or, if eligible, S), in which case the tax consequences are the same as noted above for benefit corporations and flexible purpose corporations.
221,257-59 (2012) (noting fiduciary duty concerns); Dana Brakman Reiser, The Next Big Thing: Flexible Purpose Corporations, 2 AM.
If a benefit corporation or flexible purpose corporation is required to be a C corporation because it does not meet one or more of the S corporation requirements, then the organization will be subject to the federal corporate income tax and its state equivalent, if any.
If instead a benefit corporation or a flexible purpose corporation is eligible to choose S corporation status and in fact elects to do so, then the income and permissible deductions of the organization pass through the corporation to its shareholders.