University of Maryland Extension

Taxes for not-for-profit organizations

Author: 
Nicole Cook, B.S., J.D., LL.M., Environmental and Agricultural, Faculty Legal Specialist, Agriculture Law Education Initiative (ALEI), University of Maryland Eastern Shore

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There is a lot of information about tax benefits for not-for-profits available on the Internet. For general education about tax treatment for not-for-profit urban farms, see the following:

  • Community Law Center, Inc.’s “Legal Tools for Urban Agriculture in Baltimore City”: https://communitylaw.org

  • The Sustainable Economies Law Center’s UrbanAgLaw.org website NonProfit Urban Ag (has information about each type of tax exemption organizational structure as well as examples of applications submitted by urban agriculture organizations to obtain the desired exempt status): http://www.urbanaglaw.org/non-profit-urban-ag/

  • Candid’s GrantSpace website has lots of information about starting a not-for-profit organization, including a comprehensive state-by-state resource guide for starting a not-for-profit organization with links to not-for-profit associations, legal support resources, and government agencies: https://grantspace.org/resources/knowledge-base/starting-a-nonprofit/

The 2018 Tax Cuts and Jobs Act eliminated the deduction for not-for-profit losses for individuals, partnerships, estates, trusts, and S corporations that operate a farm as a hobby or mainly for sport or recreation, or which have investment activity intended only to produce tax losses for the investors. Not-for-profit corporations other than S corporations, however, can still deduct the expenses of carrying on the activity. See IRS Publication 225. Always seek tax advice from an attorney and/or accountant.

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