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Hi from just answer. I'm PDtax.
Easiest to keep the books as a corporation, and a C corp at that. Saves an annual translation of book to tax. Maintains corporate form for business affairs as well, since owners would treat distributions from C corp differently than unincorporated form.
It's just much easier to operate as a C corp for both.
Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.
They are legally considered to be retained earnings. In fact, declarations of payments to the members must be made legally, and should be consistent with their tax treatment. Minutes of the annual meeting indicate management intent.
Distributions to LLC members taxed as a C could be receiving dividends and C corp could have taxable income. This is an IRS auditor's dream, as this error would extend for years.