Legal Entity Requirements and Tax Filing

Taxable Income

Fractured Atlas's fiscal sponsorship program is structured as a Pre-Approved Grant Relationship, also known as a grantor-grantee relationship. In this relationship, Fractured Atlas is the grantor and the legal entity associated with the fiscally sponsored project is the grantee. This means all funds released from your fund balance with Fractured Atlas for the purposes of your project are considered grant income.    

All grant income, including grant income released through fiscal sponsorship, is considered taxable according to the IRS. Fractured Atlas collects legal entity information in its fiscal sponsorship application. This legal entity is the individual or business entity responsible for reporting the income we disburse on their tax return to the IRS.    

Fractured Atlas accepts all types of legal entities. See About Legal Entities article for details on types of legal entities.  

Tax Filing

• Fractured Atlas will issue a 1099 to the legal entity associated with a sponsored project for any projects that have released $600 or more in the calendar year.  
  
  
• This does not mean that you will owe money to the IRS. As long as you are keeping good records and documentation, you should be able to offset the income with your project's business expenses throughout the year.  
  
  
• Fractured Atlas will not issue 1099s to projects that have corporations listed as their legal entity (this includes entities incorporated as nonprofits). The IRS does not require 1099s from corporations, therefore Fractured Atlas does not issue them. Corporations are still required to report all income to the IRS. In this case, you may use your fund release history information with Fractured Atlas to keep track of income for tax purposes. 
  
  
• For your reference, here are the IRS rules on 1099 reporting.

Fractured Atlas staff are not licensed tax professionals and cannot give tax filing advice. You should contact a licensed accountant or tax lawyer to ensure you're completing the correct tax paperwork for your specific business type.