Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

To make an LLC less likely to be disregarded by the IRS or

a creditor would it be...
To make an LLC less likely to be disregarded by the IRS or a creditor would it be advantageous to make my wife a 50% partner of the LLC instead of being the sole owner? If not, would I be able to make another person a 1% owner to avoid the same problem?
Show More
Show Less
Ask Your Own Tax Question
Answered in 5 minutes by:
11/3/2010
William Ellis, CPA
Category: Tax
Satisfied Customers: 296
Experience: Over 15 years of experience in public accounting
Verified

William Ellis, CPA :

This one came to me first. Are you looking for other experts' opinions?

Customer:

no

Customer:

I don't know why it went out to everybody

Customer:

I just sent it to you

Customer:

do you have an answer?

William Ellis, CPA :

Don't worry about it. It really wouldn't matter either way. If you put someone besides your wife in at 1%, that's 1% of the income that you won't have. I'd still go with the partnership approach, so you won't have to file as a C-Corp. Filing as a C-Corp means there will be corporate income tax, and the funds beyond your salary that are taken as distributions will be taxed as dividends. This is not the case with a partnership.

Customer:

But would the IRS and creditors disregard it if my wife was the partner?

William Ellis, CPA :

No, they would not.

William Ellis, CPA :

But, an LLC would be considered a C-Corp unless you elect to have it treated as an S-Corp. Either way, you'll have more issues doing this than if you form an LLP.

Customer:

Please read that those last two sentences you just wrote.

Customer:

How would an LLC be treated like an S-corp?

Customer:

Remember, my existing S-corp is an insurance agency and is separate.

William Ellis, CPA :

Forming an LLC with more than one member makes it a corporation. Every corporation is a C-Corp unless you elect to be treated as an S-Corp.

William Ellis, CPA :

Do you have any more questions about an LLC?

Customer:

you there?

William Ellis, CPA :

I'm back now. Just finished eating with my daughter in my lap.

William Ellis, CPA :

Do you have any other questions?

Customer:

If the LLC elected to be taxed as an S-Corp will it be subject to the dissolving provision if it derives more than 25% of its income from rents (passive income)?

William Ellis, CPA :

You're right. I was talking about general tax issues. Sounds like you need to treat the LLC like a partnership. Thanks again, Bill.

William Ellis, CPA
Category: Tax
Satisfied Customers: 296
Experience: Over 15 years of experience in public accounting
Verified
William Ellis, CPA and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask William Ellis, CPA Your Own Question
William Ellis, CPA
William Ellis, CPA
William Ellis, CPA, CPA
Category: Tax
Satisfied Customers: 296
296 Satisfied Customers
Experience: Over 15 years of experience in public accounting

William Ellis, CPA is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
In a LLC partnership. Two partners equal partners. No
In a LLC partnership. Two partners equal partners. No employees. Each putting max into their SEP accounts. Does the contribution have come from the partnership cash account or their personal accounts.… read more
abci168
abci168
Principal
27 satisfied customers
What does "Distributions Other Than Dividend Distributions"
what does "Distributions Other Than Dividend Distributions" mean on a corporate tax return? Was the amount listed actually giving to the shareholder? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
For a ny state partnership tax return, if you file an
For a ny state partnership tax return, if you file an extension but don't pay anything and then end up owing a lot. Do they still recognize the extension or do they charge a failure to pay penalty (fo… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
2 Member LLC now 1 Member LLC. What forms to file to IRS? I
2 Member LLC now 1 Member LLC. What forms to file to IRS?I have an LLC that was Me and Member B. Member B has now left the LLC and sold his ownership to me for no consideration. I am now the sole owne… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
I have a LLc partnership and having difficulties with my
I have a LLc partnership and having difficulties with my partner. He has been unresponsive. I do not have a written agreement with him however I do have the past 3 years K1 statements showing I am a 30% partner. I have two basic questions. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Question regarding taxation of partnership distributions and
Hi, question regarding taxation of partnership distributions and capital gains … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,310 satisfied customers
I am 50% partner in an LLC, taxed as partnership (form
I am 50% partner in an LLC, taxed as partnership (form 1065). The other 50% partner is my friend. This LLC's only assets were 2 single family houses, which we rented out. In 2016 we have sold both of … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
If an LLC holds stock in a company and then distributes the
If an LLC holds stock in a company and then distributes the stock to the members of the LLC, is it a taxable event? Or, does the taxable event occur when the member sells the stock?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
What tax form is filed to report dividends paid by US Corp?
What tax form is filed to report dividends paid by a US Corp which is owned by a Canadian Corp? I think it might be 1042S. I want to know the rate of WH.… read more
abci168
abci168
Principal
27 satisfied customers
I have a 2 members LLC (LLC1) taxed as a partnership which
I have a 2 members LLC (LLC1) taxed as a partnership which owns real estate and a portfolio of bonds. I want to transfer the real estate to another newly formed LLC (LLC2) with the same membership str… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
My LLC partnership K-1 form shows nothing in Box 19 and
My LLC partnership K-1 form shows nothing in Box 19 and shows $$$ in box 14 A and C. I have no problem with that, but when trying to refinance my home the bank refused to consider the business income … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
In a partnership can you distribute the loss, different then
In a partnership can you distribute the loss, different then the actual % of each partner? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Does Subpart F only apply for passive income? I owe a
Hi,Does Subpart F only apply for passive income?I owe a foreign corporation and my accountant told me that it is CFC. I Googled this definition and I agree with it. The part that doesn't seem logic to… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
A Nevada partnership (LLC form in Nevada) own property in
A Nevada partnership (LLC form in Nevada) own property in Nevada. in 2016, the partnership hire a manager in California to manage Nevada rental property (this manager is show on the Nevada Secretary s… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
IRS form 8832 was never filled out or filed to designate tax
IRS form 8832 was never filled out or filed to designate tax treatment for a corp i created. the corp oissued shares but never distributed them..( one owner)...there were two positions for the corp. A… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
We made a distribution to cover Partnership LLC members
We made a distribution to cover Partnership LLC members taxes. What is the correct entry? … read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I have a client who is a LLC filing as partnership (form
I have a client who is a LLC filing as partnership (form 1065). During the year 2016 a 1031 exchange transaction was carries out.The given property was sold in market for $5,000,000 and the replacemen… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
LLC entity was formed in 2016. In error, Partnership 1065
LLC entity was formed in 2016. In error, Partnership 1065 return was filed instead of filing Schedule C, where 1% was given to the son. Is there a way to revert the filing? Basically, void 1065 alread… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x