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I have a business tax question. One of my client set up LLC…

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Hi , My name is ***** ***** I have a business tax question.

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One of my client set up LLC for his restaurant in 2009. His then CPA filed form 8832 and elected to be tax treated as C-corp.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

Restaurant from then to now(end of 2017) has been in loss. Now the owner, this single member manager of the LLC want to change its tax status to disregarded tax status by filing Form 2553 and to revoke previous tax election of c corp. I want to know whether this idea is workable and then, the single member manager can use his NOL from the restaurant to offset his other income using schedule c of his personal income tax return.I would be appreciated for your clear-cut opinion.

Submitted: 4 months ago.Category: Tax
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Answered in 1 hour by:
3/13/2018
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,276
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Hey! I'm Carter, I'm a CPA.
Form 2553 is used to convert to an S Corp, not a disregarded entity.
Either way, the NOL will be lost when he changes from a C Corp to an S Corp. If it goes C to disregarded entity, then that's a taxable liquidation, which if any gain is recognized can be soaked up by the NOL but the NOL will not carry on past that.
Let me know if you need anything else. If not, please leave a rating. Thanks!
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Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago

Hey! Just wanted to follow up to see if you needed anything else. If not, please leave a rating so I can get credit for helping you out. Thanks!

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