Posted by Michael Popovich on September 25, 2005 at 10:18:33:
What are the issues with having an LLC taxed as a corporation?
Pros for LLC/Corp. besides legal protection - Posted by iKwak
Posted by iKwak on September 20, 2005 at 24:32:38:
I been researching on how to form a LLC in the state of California.
Let me give you a scenario and see if you can toss your 2cents.
An investor wants to purchase a rental property and buy it under the new LLC name that he recently formed.
The investor collects monthly rent and pays the property tax.
Since it is a LLC, the investor would need to file a separate tax for the residual income?
Re: Pros for LLC/Corp. besides legal protection - Posted by Tom Bazley, CPA
Posted by Tom Bazley, CPA on September 20, 2005 at 11:04:09:
If it’s a single member LLC, it’s a disregarded entity for federal income tax purposes. So the investor simply reports the activity on Schedule E of his 1040 as though the LLC did not exist.
Re: Pros for LLC/Corp. besides legal protection - Posted by iKwak
Posted by iKwak on September 20, 2005 at 11:22:17:
I appreciate the response.
So in order to get some tax deductions, it is wise for the investor to setup a two or more member management for the LLC?
Re: Pros for LLC/Corp. besides legal protection - Posted by Tom Bazley, CPA
Posted by Tom Bazley, CPA on September 21, 2005 at 06:13:56:
It makes no difference if the properties are in an LLC or not. Assuming the investor is not phased out of the capability of deducting rental losses, he will still get whatever deductions are allowed no matter how the property is titled. What would throw a monkey wrench into the whole thing is to form an LLC & elect to have it taxed as a corporation. That would ba a big mistake. But assuming it’s taxed as a partnership, the same passive activity rules, at risk rules & rental loss limitations apply.