To join in on this discussion, you must first log in.

Discussion:LLC Members forming S-corps

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Basic Tax Questions --> LLC Members forming S-corps


Discussion Forum Index --> Tax Questions --> LLC Members forming S-corps

Jossiecpa (talk|edits) said:

30 October 2012
Two attorneys are members of an LLC. They are forming S-corps that will then be the members of the LLC instead of them personally. What are the tax implications of this, and is there anything messy I should be aware of?

RoyDaleOne (talk|edits) said:

30 October 2012
Welcome Jossie, now to the battlefield.

I would guess that one of the tax issues is how much salary will be paid and the related costs or savings in payroll expenses.

Retirement planning, employee benefits, vehicles, and other items will also be on the table.

The issues you will have are the same for accounting firms, attorneys, and other professional type of businesses.

May be someone can recommend some good reference material for you. I use my CPE to try and get an overall view of what the ideas and trends currently are being used.

You need to get posters like Kevin5 to make recommendations because if I am not mistaken this is his primary area of practice.

By the way the answer to your question would fill a tome or two.

Good luck.

Jossiecpa (talk|edits) said:

30 October 2012
Sorry, I should have posted the question better. I'm extremely familiar with S-corps, as I'm a CPA with 15+ years experience. My question was the transfer of the ownership of the LLC from the individuals to the S-corps. Is it just a transfer of membership interest with no tax implication, or will the S-corps need to purchase the membership interests from the individual members? I'm assuming that the articles of organization will need to be amended, but I'm hoping they don't need to form a new LLC because of this change in entity ownership from individual to S-corp.

Ckenefick (talk|edits) said:

30 October 2012
What you have is a 351 transfer to the corp...a transfer of a partnership interest. So, what do we need to worry about here?

Jossiecpa (talk|edits) said:

30 October 2012
But what about on the LLC side? Any implications?

CathysTaxes (talk|edits) said:

30 October 2012
Correct me if I'm wrong, but after using the 351 to transfer assets to the corp (at basis), if the shareholders wish to transfer the same assets to either themselves or an entity that is not a corporation, it would have to be at FMV. If real estate is one of the assets (their office, maybe), you may not want this.

Ckenefick (talk|edits) said:

30 October 2012
So, what do we need to worry about here?

That's part of my question...What exactly do we, and should we, be worrying about here - from all angles?

To join in on this discussion, you must first log in.
Personal tools