Under what scenario would I elect to have my LLC taxed as an S Corp?
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In this audio snippet, you'll hear about:
- It's not a common thing because an LLC is already a tax–through entity, and the same thing happens with an LLC
Audio Transcript
Travis:
Under what scenario would I elect to have my
LLC taxed as an S corp.?
Yosef:
Well...
Travis:
Yosef are you still with me? Oh.
Yosef:
The question that you're asking is very interesting. We actually...To
the best of my knowledge...I've actually never had an LLC corporation
elect to be taxed as an S corporation and I'll tell you why.
Travis:
OK.
Yosef:
Because an LLC by default is a flow–through entity which means the LLC
files a form 1065; a partial tax return, generally with the IRS.
Basically whatever income that the LLC earns flows directly to their
shareholders on their own schedule E of their personal tax return.
The
same thing pretty much happens with an S corporation as well. The
shareholder is either going to receive a K1 from an LLC or a K1 from an
S corporation.
Travis:
Right.
Yosef:
So, I think that question is a great question. You know, when is an LLC
going to elect to file as an S corporation? But generally I don't think
they would.
Travis:
[laughs] That's a good enough answer for me because it just perplexes the heck out of me.
Yosef:
No I think it would perplex the heck out of most attorneys. To ask that
question...It's an interesting option. I know some very technically
specific cases as to where that would be done but that would go far
beyond the scope of the phone, of this conversation.
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