Discussion:Texas rental real estate

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Discussion Forum Index --> Tax Questions --> Texas rental real estate

Tennessee tom (talk|edits) said:

18 November 2005
I am acquiring a 4M business rental property in Texas (I am from TN) and my attorney thinks there is an additional tax on an LLC in TX that would not be incurred if the business were set up as an S Corporation. It looks like to me the Franchise Tax is the same either way. Anybody in TX know about this?


BCG CPA (talk|edits) said:

22 November 2005
An S Corporation is taxed the same as an LLC for Texas Franchise Return reporting purposes. The franchise tax can be avoided if gross receipts for the year are less than $ 150,000; you would then file the No Tax Due short form. Even if the S Corporation has a profit, no tax would be due if gross receipts are less than $ 150,000. However, depending upon the entity's capitalization, the franchise tax could come into play. You can download the franchise tax instructions from the Texas Comptroller's website. Go to www.window.state.tx.us/taxinfo/taxforms/05-386.pdf

If gross receipts exceed $ 150,000, you can still avoid the tax by zeroing out the S Corporation's profits, i.e., bonuses to shareholders at year-end.

Brian (CPA in Dallas)

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