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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14130
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I have an LLC that is the holding company of another LLC (2nd).

Resolved Question:

I have an LLC that is the holding company of another LLC (2nd). The 2nd LLC owns income real estate and then passes the income to the holding company which I then withdraw from the holding company.

How would I file my taxes so that I can still have all the pass through benefits (no social security or medicare taxes) as if the real estate was in my name personally?

Holding company 1 Managing Member (me)
Company that owns real estate or LLC 2 1 Managing Member that is the Holding Company.
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

When you file your 1065 forms for each of the LLCs, the income will be designated as rent. When you get your K-1 form, the income will retain the same attributes as if you held the real estate personally. There is no social security or medicare taxes on rental income

Customer:

Is this on a consolidated return or are these returns separate?

MyVirtualCPA :

Are both of these single member LLCs?

MyVirtualCPA :

or do you have partners

Customer:

Single member LLC's

Customer:

I am the member of the LLC 1 and LLC1 is the member of LLC2

MyVirtualCPA :

Then the income goes straight to schedule E on your tax return

MyVirtualCPA :

LLC2 is disregarded and goes to the return of LLC1, and LLC1 is disregarded and goes to your return

MyVirtualCPA :

The only way they would have separate tax returns would be if you elected to be taxed as a corporation or S corp, which is not advisable for real estate

Customer:

Is there a field to put both LLC's on there with both tax id's?

MyVirtualCPA :

The tax IDs are for banking purposes only

MyVirtualCPA :

single member LLCs do not report income to the IRS using the tax ID

Customer:

Thank you, XXXXX XXXXX print this conversation out and share it with my accountant.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14130
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 2 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thanks, C for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today

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