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Transferring funds from one corporation to a new corporation (501C3)

We have one corporation (A) and have recently began a second corporations (B), both of them are 501c3 non-profits. In order to help this new corporation 'B' get started, corporation 'A' transferred money from its' bank account to corporation B's bank account. 

 

I'm converting to Quickbooks online now and starting a brand new account for the new corporation B. My question is how do I enter this transfer of funds in the chart of accounts for both corporations? This is not a loan, and corporation B will never pay corporation A back. 

 

Thank you for any guidance!!

Solved
Best answer 03-12-2019

Accepted Solutions
Established Community Backer ***

Re: Transferring funds from one corporation to a new corporation (501C3)

You need to talk to your Tax Accountant.  As a 501c3 you do not want to assume any info you get from any online forum will hold up in a tax audit.  Your accountant will know both companies and what you can legally do.

 

The QBs side of it should be pretty straight forward.  Payment from A to B, B showing the deposit.  It's documenting it correctly that's going to be the issue so there are no tax or legal issues.

 

Established Community Backer ***

Re: Transferring funds from one corporation to a new corporation (501C3)

@StellaMaris 

 

I agree with Pete, get with a tax accountant

 

the issue is that the money taken from A, had to be for a reason in A's books. Either you loaned the money to the start up, or you were purchasing shares of stock in B.

4 Comments
Established Community Backer ***

Re: Transferring funds from one corporation to a new corporation (501C3)

You need to talk to your Tax Accountant.  As a 501c3 you do not want to assume any info you get from any online forum will hold up in a tax audit.  Your accountant will know both companies and what you can legally do.

 

The QBs side of it should be pretty straight forward.  Payment from A to B, B showing the deposit.  It's documenting it correctly that's going to be the issue so there are no tax or legal issues.

 

Established Community Backer ***

Re: Transferring funds from one corporation to a new corporation (501C3)

@StellaMaris 

 

I agree with Pete, get with a tax accountant

 

the issue is that the money taken from A, had to be for a reason in A's books. Either you loaned the money to the start up, or you were purchasing shares of stock in B.

Community Explorer **

Re: Transferring funds from one corporation to a new corporation (501C3)

Thank you for your help Pete_MC!

Community Explorer **

Re: Transferring funds from one corporation to a new corporation (501C3)

Thank you for your help Rustler!