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ABC Accounting Group
ABC Accounting Group, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 712
Experience:  Business Consultant/Accounting Manager
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When an LLC elects to be taxed as a corporation, how is the

Customer Question

When an LLC elects to be taxed as a corporation, how is the equity account stated? Does it need to report Capital Stock and REtained earnings just like a corporation, or what terminology is used. I guess the first question should be 'does the LLC have capital stock?"
Submitted: 1 year ago.
Category: Tax
Expert:  ABC Accounting Group replied 1 year ago.

Hi. An LLC can pick its structure - Sole Proprietor, Partnership or a Corporation. With a corporation, you can have stock (re - last sentence) and will have retained earnings (which is the cumulative net income/loss over the prior years + the current year). LLC's typically may not issue stock, its members may sell portions of the company as a way of generating working capital.

Expert:  ABC Accounting Group replied 1 year ago.

Best Regards.

Expert:  ABC Accounting Group replied 1 year ago.

Also - the contributor’s capital account (the capital account represents the equity that member has in the LLC) will equal the amount of cash contributed and the fair market value of the property contributed to the LLC (net of liabilities).

Expert:  ABC Accounting Group replied 1 year ago.

If you have any questions, let me know. If you do not, a positive rating is very much appreciated.