Discussion:C Corp which owns an LLC
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Revision as of 03:34, 15 March 2008 PostingFromWork (Talk | contribs) (Bad choice of wo) Next diff → |
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| The single-member LLC owned by an S corporation is treated for tax purposes as if it did not exist as an entity separate from its owner. As JR said, think of it as a division. For accounting purposes, though, you DO want to keep their books and records separate; otherwise the S corporation's assets may get no protection from the claims of creditors of the LLC -- which was the whole reason for forming the LLC in the first place.}} | The single-member LLC owned by an S corporation is treated for tax purposes as if it did not exist as an entity separate from its owner. As JR said, think of it as a division. For accounting purposes, though, you DO want to keep their books and records separate; otherwise the S corporation's assets may get no protection from the claims of creditors of the LLC -- which was the whole reason for forming the LLC in the first place.}} | ||
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| + | {{ForumReplyPost|UserID=PostingFromWork|Date=15 March 2008|Text=Bad choice of words on my part, sorry.}} | ||
Revision as of 03:34, 15 March 2008
Discussion Forum Index --> Advanced Tax Questions --> C Corp which owns an LLC
Discussion Forum Index --> Tax Questions --> C Corp which owns an LLC
Wjalverson (talk|edits) said: | 14 March 2008 |
| One of my C Corp clients now owns an LLC. How do I file a return for this situation? Do I consolidate the LLC into the C Corp? | |
| March 14, 2008 | |
| Assuming that it's the only owner. Pretend it's a division/department. | |
PostingFromWork (talk|edits) said: | 14 March 2008 |
| You may need to file seperate payroll returns and state tax filings, among other things, dispite filing a consolidated federal return. | |
| 15 March 2008 | |
| Is "consolidated return" appropriate here if the LLC is a disregarded entity? The consolidation definitions in Reg Sec 1.1502-1 and Sec 1504 talk only about corporations:
(a) Group. The term group means an affiliated group of corporations as defined in section 1504. (b) Member. The term member means a corporation (including the common parent) that is included in the group c) Subsidiary. The term subsidiary means a corporation other than the common parent which is a member of such group. It would seem to me that a corp or s-corp with a wholly owned SMLLC that is a disregarded entity would combine the two, as JR stated: "pretent it's a division/department, which I think is different than a consolidated return where all members have to be listed. This really isn't my area but I chimed in because I have just such a return on my desk now that I'm preparing an extention for and this came up, so I'm trying to solve this myself. | |
| 15 March 2008 | |
| No, it isn't a consolidated return in the Sec 1502 sense. That section and the copious regulations under it apply to groups of C corporations that are at least 80% owned, directly or indirectly, by a common parent corporation. Such a group may elect under federal law to file a consolidated return.
The single-member LLC owned by an S corporation is treated for tax purposes as if it did not exist as an entity separate from its owner. As JR said, think of it as a division. For accounting purposes, though, you DO want to keep their books and records separate; otherwise the S corporation's assets may get no protection from the claims of creditors of the LLC -- which was the whole reason for forming the LLC in the first place. | |
PostingFromWork (talk|edits) said: | 15 March 2008 |
| Bad choice of words on my part, sorry. | |
