Requirements

(1) To be a low-profit limited liability company, a limited liability company shall: (a) contain in its name the abbreviation "L3C" or "l3c"; (b) state in its certificate of organization that it is a low-profit limited liability company; (c) organize under this chapter; and (d) be organized for a business purpose that satisfies, and at all times operates to satisfy each of the requirements under Subsection (2). (2) A low-profit limited liability company: (a) shall significantly further the accomplishment of one or more charitable or educational purposes within the meaning of Section 170(c)(2)(B), Internal Revenue Code; (b) shall demonstrate that it would not be formed but for the limited liability company's relationship to the accomplishment of a charitable or educational purpose; (c) subject to Subsection (3), may not have as a significant purpose the production of income or the appreciation of property; and (d) may not have as a purpose to accomplish one or more political or legislative purposes within the meaning of Section 170(c)(2)(D), Internal Revenue Code. (3) Notwithstanding Subsection (2), if a low-profit limited liability company produces significant income or capital appreciation, in the absence of other factors, the fact that the low-profit limited liability company produces significant income or capital appreciation is not conclusive evidence of a significant purpose involving the production of income or the appreciation of property.