LLC taxed as corporation?

[NECPA in NEBRASKA]

I have seen LLCs taxed as S corporations or partnerships, but today I was told that an attorney told my client and siblings to put their family farm rental into an LLC that would pay all of the taxes and they would not have to pay anything. In fact, they can all go on family vacations and call it a board meeting! This guy is way more popular than I am, because I asked questions when I did not received the normal rental income and expenses from my client.

I have never seen a family farm rolled into a "C" Corp. It is only land and worth about $250K today. Does anyone know if this is something new and I am just slow? Be nice, I know that I'm a little slower to pick up new stuff. 

Thanks!

 

[BHoffman]

I would ask to see a copy of form 8832 showing an election to be taxed as a corporation, the election start date, etc.  

[DANRVAN]

9 hours ago, NECPA in NEBRASKA said:

an attorney told my client and siblings to put their family farm rental into an LLC that would pay all of the taxes

Did he explain the tax consequences of putting real estate into a C Corp, potential double taxation........?

You need bring these issues to your client's attention.  Good luck.

[Lee B]

I have read aarticles recommending an LLC as a excellent way to own family vacation property but not for tax reasons.

But for legal reasons like making it easier to transfer ownership between family members, sharing expenses  erc.

[NECPA in NEBRASKA]

6 hours ago, cbslee said:

I have read articles recommending an LLC as a excellent way to own family vacation property but not for tax reasons.

But for legal reasons like making it easier to transfer ownership between family members, sharing expenses  erc.

The property would not be used for vacation, as it is local farm land. They were told that they could go to Florida or wherever and deduct the vacations as board meetings. 

I only questioned this, because I was looking for a K-1  or the normal share of income from somewhere. The client believes that there is no income tax involved at all and no return needed. I am pretty sure that the attorney and the taxpayers are both confused about taxes. 

I am only preparing my client's 1040 and will not be taking on the additional taxes. 

Thank you,

 

Bonnie

 

 

[Lee B]

Are you saying that you are going to prepare this client's 1040 without the farm land rental?

[NECPA in NEBRASKA]

Cbslee, No I am not preparing the return until they get an answer from the attorney and I have proof that they are a C corporation or I get a K1. The sibling that is in charge of making these decisions is not my client.