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Many LLCs May Have Invalid S Elections and Not Know It
Posted by Leigh Nali on Fri, Jun 22, 2018 @ 10:20 AM

Limited Liability Companies (LLCs) emerged as the preferred form of doing business many years ago. In addition to state law advantages and liability protection, LLCs are flexible in their tax status for federal income tax purposes. When businesses that are organized as LLCs elect to be taxed as S corporations they follow a simple procedure that is based on eligibility criteria. However, an oft-overlooked foot fault may leave many LLCs surprised to find that they were not eligible to be S corporations. This would have disastrous tax consequences and a great number of unsuspecting LLCs may be in this predicament without knowing it.

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Topics: IRS, Tax Cuts and Jobs Act, TCJA, Leigh Nali, LLCs, Limited Liability Companies, S Elections

Does the New Tax Law Make Entity Selection More Complicated?
Posted by Leigh Nali on Tue, Mar 27, 2018 @ 04:20 PM

The new corporate tax rate is one of the hallmarks of the tax legislation introduced as the Tax Cuts and Jobs Act (TCJA). At a flat 21 percent, it represents a double-digit decrease from the previous top rate of 35 percent. Pass-through entities, such as partnerships, LLCs, and sole proprietorships also benefit from reductions in their tax rates. The top individual tax rate drops from 39.6 percent to 37 percent and business owners may be able to take advantage of the new 20 percent deduction under Internal Revenue Code Section 199A on qualified business income. On its face it may appear that the corporate structure is the best option, however, you need to dig deeper to conclude on that.

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Topics: S Corporation, entity structure, Tax Cuts and Jobs Act, TCJA, Leigh Nali, C Corporation

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