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Megan C
Megan C , Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16539
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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We are a S Corp that owns 100% of a Sub S. We are selling

Resolved Question:

We are a S Corp that owns 100% of a Sub S. We are selling the Sub S and most of the fixed assets of the S Corp. We have been told that we should dissolve the S Corp and reincorporate as a LLP because we get rid of the S Corp history and LLP provides more flexibility? Is there an advantage to ridding ourselves of the S Corp history and why?
Submitted: 3 years ago.
Category: Finance
Expert:  Megan C replied 3 years ago.

MyVirtualCPA :

Thank you for your question, and thanks for using JustAnswer.com

MyVirtualCPA :

The LLP is a limited Liability partnership, and you would have one general partner at least and then the rest limited partners. This provides limited liability for the limited partners

MyVirtualCPA :

I would reincorporate as an LLC not an LLP

MyVirtualCPA :

The advantage to ridding your self of the s corp and starting the llc would be that no longer would you have restrictions on who could be shareholders.

MyVirtualCPA :

There are restrictions on who can be shareholders of an S corporation and if you side step those you could lose your s status

MyVirtualCPA :

This would be your primary advantage

MyVirtualCPA :

If you don't mind that there are restrictions on who can join your business then there's no advantage

MyVirtualCPA :

Is there anything else that I can assist you with today?

MyVirtualCPA :

If not, please rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

Yes I understand and we do not mind the restrictions . . . can you respond to my question about ridding ourselves of the tax history? Thanks

MyVirtualCPA :

I don't see a benefit of doing that...it's just a matter of preference

MyVirtualCPA :

Is there anything else that you may need

Customer:

No, I am all set.

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