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We are a small Nevada registered foreign corp with up and down profits less than 50M a year. Now Nevada wants to require state tax forms and taxes just like Penna. Upside?

Submitted: 69 days and 2 hours ago.

Category: Tax

Value: $15

Status: CLOSED

Posted by bizmatters 69 days and 1 hours ago.

Answer

Dear XXXXXXXX,

while many people form Nevada corporations, to avoid corporate taxes, the real reason for forming a Nevada Corporation, which is far more beneficial are:

1. Corporate protections...Nevada is considered the best, even better than Delaware, by many experts in the field.

2. Autonomy and confidentiality. Nevada is the only state that right now does not have an automatic compliance agreement to share information with the IRS. The IRS has to activley seek the information. Other states automatically share information with the IRS.

Nevada does not have an information sharing agreement with the IRS.

What form of corporation do you have: S-corp,LLC,C-corp

Edited by bizmatters on 9/15/2009 at 7:39 PM

69 days ago.

Reply

A C corp. and the problem is that I still seem to have to file Pa corporate taxes.
Now Nevada has instituted tax taxes and returns and an additional fee as a business tax because we do more than $26,500 gross and do not operate with a "home business address". We are family owned and the shares are within the family (4).

Posted by bizmatters 69 days ago.

Answer

As a C-corp, there is no other "upside" to this situation. The only benefit I see is that PA should give you credit for taxes paid to other jurisdictions. You may want to think about restructuring your C-corp to an S-Corp or LLC. C-corps pay double tax as it is. Now you have to pay Nevada also.

68 days and 23 hours ago.

Reply

Thanks so far. One last ? if it is within your expertise.
Would we normally be able to switch to an S corp without professionals handling it for us?
And then making the change, could we just automatically become a PA corp.

Thanks again.

Accepted Answer

You can do it yourself, but it can be complicated. You may decide that it is in your best interest to keep going the way you are. BUT, with your level of income, I would think you would be better off in the long run. The most critical issue is when you convert from a C to an S corp you create a taxable event. You may be exposed to capital gains on any appreciated C-corp assets, and any losses woudl not be able to be succeeded to with the S-corp. You can do something else, You are small so it would not be hard to discontinue operations and re-establish as a new S-corp in PA.

Accepts:
Expert:	bizmatters
Pos. Feedback:	100.0 %
Answered:	9/16/2009

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We are a small Nevada registered foreign corp with up and down profits less than 50M a year. Now Nevada wants to require state tax forms and taxes just like Penna. Upside?

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Thanks so far. One last ? if it is within your expertise.Would we normally be able to switch to an S corp without professionals handling it for us?And then making the change, could we just automatically become a PA corp.Thanks again.

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Thanks so far. One last ? if it is within your expertise.
Would we normally be able to switch to an S corp without professionals handling it for us?
And then making the change, could we just automatically become a PA corp.

Thanks again.