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Ask Stephen G. Your Own Question

Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4046
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I have filed a c corp return. I have listed as companies owned

Resolved Question:

I have filed a c corp return. I have listed as companies owned an s corp and an llc. Is this correct?
Submitted: 10 months ago.
Category: Tax
Expert:  Stephen G. replied 10 months ago.

Stephen G. :

Hello, my name isXXXXX & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.

Stephen G. :

I'm sure I understand your question; are you saying that a "C" corp owns an "S" corp and LLC, or what are you asking?

Stephen G. :

I'm not sure it should say, sorry.

Customer:

Yes. The c corp owns several companies. This is the first year filing this way. The c corp is a holding company.

Stephen G. :

The "C" corporation can't own an "S" corporation. Do you have your own CPA?

Customer:

I am doing it. I am a cpa from a long time ago. I haven't prepared a c return in years. I did not file a consolidated return but I thought that the llc filing as an s corp could be owned by the c.

Stephen G. :

No. You can't pass through S-Corp earnings or losses to a C-Corp; only to individuals; you'll need to fix your S-Corp ownership to the individual owner(s) & file a separate return for the S-Corp. The C corporation would need to file its own return.

Stephen G. :

You LLC can't be owned by a C-Corp either

Stephen G. :

Your LLC can file as a partnership if there's more than one member or as a sole proprietor if there's a sole owner or an S-Corp or a C-corp.

Customer:

I understand. I filed an information return for llc/s corp. It had a loss. I did not put the loss on c return. I only listed on the c return as owned.

Customer:

What kind of companies then can a c corp own?

Stephen G. :

It doesn't work that way; if you chose to file as an S-Corp; you must issue a K-1 to the owner; that owner can't be an S-Corp.

Stephen G. :

Other C Corps

Stephen G. :

You see the way it works is different than ownership; As you know an LLC doesn't have a particular return that is an LLC return so it has those filing options I've given.

Stephen G. :

Who owns your LLC? Just you?

Stephen G. :

In other words who are the members of the LLC?

Stephen G. :

Do you actually have an "S Corp" or do you have an LLC filing as an "S-Corp"?

Customer:

I am doing this for someone else. He has 3 companies that do real estate stuff. We formed a c corp to own them all are llcs with sole ownership and one is an llc filing as an s. To maximize tax advantages we formed holding company. According to tax law, it's my understanding that this is allowed.

Stephen G. :

What are you doing with the S-Corp as far as a K-1 is concerned?

Customer:

I made it out to the holding company. It was a loss. Inalso opted not to fike a consolidated return for this first year.

Customer:

Llc filing as an s corp for one of the companies, llcs for the other two

Stephen G. :

Here's an example of the way the LLC's are treated for tax purposes.

Stephen G. :

Income taxation


For U.S. federal income tax purposes, an LLC is treated by default as a pass-through entity.[4] If there is only one member in the company, the LLC is treated as a “disregarded entity” for tax purposes, and an individual owner would report the LLC’s income or loss on Schedule C of his or her individual tax return. Thus, income from the LLC is taxed at the individual tax rates. The default tax status for LLCs with multiple members is as a partnership, which is required to report income and loss on IRS Form 1065. Under partnership tax treatment, each member of the LLC, as is the case for all partners of a partnership, annually receives a Form K-1 reporting the member's distributive share of the LLC's income or loss that is then reported on the member's individual income tax return. On the other hand, income from corporations is taxed twice, once at the corporate entity level and again when distributed to shareholders, thus more tax savings often results if a business formed as an LLC rather than a corporation.[5]


An LLC with either single or multiple members may elect to be taxed as a corporation through the filing of IRS Form 8832.[6] After electing corporate tax status, an LLC may further elect to be treated as a regular C corporation (taxation of the entity’s income prior to any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members) or as an S corporation (entity level income and loss passes through to the members). Some commentators have recommended an LLC taxed as an S-corporation as the best possible small business structure. It combines the simplicity and flexibility of an LLC with the tax benefits of an S-corporation (self-employment tax savings).

Customer:

Is there an option to talk directly on a consulting basis. You have my credit card and phone numbrr?

Stephen G. :

No. Unfortunately that isn't permitted and the experts do not have that information & if you try to provide your phone number, or if I were to try to provide mine, the website would "x" it out & as experts we aren't permitted to contact customers outside of the site; that's why this "chat" method is available.

Customer:

I received dividends from one of the llcs and reported tgat on c return.

Customer:

Ok, thank you for your help.

Stephen G. :

Does the holding company (C corp) own the LLCs or does the individual own the LLCs?

Customer:

Holding company

Stephen G. :

Here are your options as I see them;

Stephen G. :

OK, then you can't file an S-Corp return for any of the LLCs

Stephen G. :

You can file 3 C corp returns.

Stephen G. :

or a consolidate C corp return

Stephen G. :

So these must be new LLCs?

Stephen G. :

If you file separate C corp returns you must deal with allocation of the "Surtax exemption" due to the common ownership

Customer:

I will file an amended c return.

Stephen G. :

If you want to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Thanks again for using us for your tax and financial questions. You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used to rate our performance;

Please remember to rate my response; it is the only way we get credit for our work.

Customer:

Thank you.

Stephen G. :

Thanks for using JustAnswer.com

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4046
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Tax Specialists are ready to help you

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