Discussion:Llc taxed as an S corp
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Discussion Forum Index --> Tax Questions --> Llc taxed as an S corp
| 26 August 2008 | |
| If an llc multiple member wants to be taxed as an s corp, does the llc become the stockholder of the s corp? also who gets the k-1 and can a non citizen be a member of the llc and still qualify as an S corp?
How does all this work Neil | |
| 26 August 2008 | |
| The llc would work like an s corp. There would have to be p/r. | |
| August 26, 2008 | |
| He didn't even ASK about p/r!!
No, the members of the LLC are the s/h's of the S, and must qualify the same as any other S corp s/h's. No non-citizens. | |
| 26 August 2008 | |
| so no stock certificate is issued and the members share of ownership can change based on the LLC member agreement and each member gets a K-1? is this all correct | |
| August 26, 2008 | |
| I would say, no, you can't change ownership. By electing to be taxed as an S, you choose to have profits split in accordance with 'stock ownership' however that sorts out. Another reason I hate the check the stupid box regs. But yes, each gets a K1 just as in an S. For tax purposes, it IS an S. Think of it that way. | |
| 26 August 2008 | |
| so why would the llc elect the S corp other than the SE tax benefit | |
| 26 August 2008 | |
| I thought that a non-citizen could be a s/h, as long as he/she is a resident alien. | |
| August 26, 2008 | |
| Someone sold them the LLC first.
Too lazy to set up a corp. Some states there actually is a good reason, I think CA is one, where LLC's are taxed differently. Ignorance. How long a list you want? (Oh, and they properly separate the membership interests into active and limited, they can still save SE taxes. Search on bifurcate and the article will pop. | |
| 28 August 2008 | |
| An LLC (or individual, for that matter) can elect to be treated as a corp-you would file form 8832 to be classified as a corporation and then make the s election using form 2553. Once that is done, file as if you are an s-corp; all of the s-corp tax rules apply regarding who can be a s/h, p/r, etc. The advantage here is that for legal purposes the entity is still an LLC and not required to keep all of the records that a corp is required to keep. | |
| August 28, 2008 | |
| Where do I sign up to be personally taxed as a corporation? | |
| August 28, 2008 | |
| Gee, I always wanted a dividends received deduction, and to stay out of the top bracket until my personal income hit $10 million, plus exemption from pesky things like the estate tax and jail as a criminal sanction.
Sadly, I'm not an eligible entity. | |
ReadMyLips (talk|edits) said: | 23 September 2008 |
| I stumbled upon this looking for something else.....
Hard to believe all pro's don't know about checking the box. From what I've heard recently, it's malpractice NOT to set up as an LLC; then you can just make the 8832 elections. The advantage is that you are legally an LLC so you don't have the corporate record-keeping requirements, etc. but if you want corporate tax treatment, you got it! Seems like the best of both worlds. No question here, just found it interesting; comments welcome. | |
| 23 September 2008 | |
| Readmylips, I'm sure everyone here knows about checking the box, but some of us have our tongues firmly planted in our cheeks <G>. LH was gently reminding Wright that an individual, qua individual, is not eligible to elect to be taxed as a corporation. The "check-the-box" rules (Reg. Sec. 301-7701-3) apply to "business entities" that are not corporations. An individual is not a business entity. An individual can own a business entity, however, and that entity can elect to be taxed as a corporation or to be disregarded as an entity separate from its owner. So an individual can't elect to be taxed as a corporation. That's why LH can't get that DRD or pay his income tax at corporate rates. He's not an eligible business entity. | |
| 29 September 2008 | |
| Be careful with your organization papers...S-Corp need proportionate distributions...most LLC operating agreements don't provide for that...and if you blow the S, you revert to a C | |
| September 29, 2008 | |
| RML, search under the "check the stupid box" for many many traps in your thinking. There are a lot of issues which are contradictory for an LLC and an S...and when push comes to shove, which one do you pick? Pick one and you violated legalities, pick the other, and you violated tax law and perhaps blew S. Very complex. Hence why I call it the stupid box. | |
| 29 September 2008 | |
| BINGO laklein and JR1!!!! Gold Stars for you two. That is the exact reason why I rarely, if every, play the LLC taxed as an S-Corp game.
In my experience it's difficult enough to get clients to understand, respect and follow the rules for properly maintaining a single entity and it's impossible getting them to understand, respect and follow the rules for two entities simultaneously as is required with this strategy. Unless they are willing to hire me on in permanent governance/compliance role, of which the cost is usually prohibitive, I tell them that they're likely to get themselves in trouble. | |
