Max W Posted June 15, 2022 Report Posted June 15, 2022 Is there any advantage or disadvantage to this? Quote
DANRVAN Posted June 15, 2022 Report Posted June 15, 2022 It appears you are referring to a single member LLC. An LLC has no meaning for tax purposes, it is a creation of state law. So for tax purposes it does not make any difference if the investments are held under the client's LLC . Quote
Lee B Posted June 15, 2022 Report Posted June 15, 2022 12 hours ago, Max W said: Is there any advantage or disadvantage to this? Is it an SMLLC, A 1065 OR A 1120S? Quote
JackieCPA Posted June 15, 2022 Report Posted June 15, 2022 I suppose a disadvantage would be if you have large stock holdings held under your LLC and the LLC is being sued/assets being seized, those holdings would be apart of it - on the flip side the LLC's stock holdings would be safeguarded against any personal losses. Tax wise, having it under SMLLC, multi-LLC, or S-Corp really wouldn't change the taxability of them. I do one one client that is an S-Corporation and has a sizeable amount in stock holdings with a brokerage firm - that only started because they didn't have enough basis at the time to take it as a distribution and put the investment in their personal name. Quote
Lynn EA USTCP in Louisiana Posted June 15, 2022 Report Posted June 15, 2022 1 minute ago, JackieCPA said: I do one one client that is an S-Corporation and has a sizeable amount in stock holdings with a brokerage firm - that only started because they didn't have enough basis at the time to take it as a distribution and put the investment in their personal name. Wouldn't putting the investment in their personal name be considered a distribution? Quote
JackieCPA Posted June 15, 2022 Report Posted June 15, 2022 That is why they put the investment in the S-Corporations name - because they didn't have enough basis to take a distribution and put the investment in their personal name. Quote
Lynn EA USTCP in Louisiana Posted June 15, 2022 Report Posted June 15, 2022 Gotcha - I must have misunderstood what you wrote in the OP. Quote
Lee B Posted June 15, 2022 Report Posted June 15, 2022 If the investments were contributed to the LLC (1065), then you would probably have to deal with differing inside and outside basis, extra tracking work. If the investments were inside an LLC (1120S), and the stockholders wanted to distribute the investments, wouldn't you have the same FMV issues that you have with distributing Real Estate held inside an 1120S? Quote
Max W Posted June 15, 2022 Author Report Posted June 15, 2022 9 hours ago, cbslee said: Is it an SMLLC, A 1065 OR A 1120S? SMLLC 10 hours ago, DANRVAN said: It appears you are referring to a single member LLC. An LLC has no meaning for tax purposes, it is a creation of state law. So for tax purposes it does not make any difference if the investments are held under the client's LLC . It can become a disadvantage in CA due to the way the annual LLC fees are calculated. The fee is $800 up to $250,000 net income; then another $900 if it goes above that; an additional $1600 over $500K. 1 Quote
DANRVAN Posted June 16, 2022 Report Posted June 16, 2022 4 hours ago, Max W said: It can become a disadvantage in CA due to the way the annual LLC fees are calculated I am curious if any other assets are held by the LLC. Is there a business activity operated by the LLC? Quote
JackieCPA Posted June 16, 2022 Report Posted June 16, 2022 21 hours ago, Max W said: It can become a disadvantage in CA due to the way the annual LLC fees are calculated. The fee is $800 up to $250,000 net income; then another $900 if it goes above that; an additional $1600 over $500K. Oh man! MN LLC's are way different than that - SMLLC's only have taxes due like federal and no extra fees. 1 Quote
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