LLCs taxed as S Corporations. Kiritsis Law Group Phone # 212 922 0005
Before we delve into any serious analysis of S Corp tax treatment of LLCs, it important to grasp one key legal concept: An S Corporation is a federal tax election, and NOT a State legal entity type.
Major ConceptsS Corporations are typically, on a State legal entity level either one of the following entity structure types: LLCs (Limited Liability Companies) or Corporations. Depending on specific State LLC statutory law provisions, it may in certain case be hard/practically impossible to have the LLC successfully elect and operate with S Corp tax treatment.
Other TopicsA common reason for LLCs electing S Corp tax treatment, as opposed to other pass-through entity type settings, are the desire to combine the following features: pass-through tax treatment, but with segregate entity wide tax reporting. LLCs taxed as S Corps for federal income tax purposes, may somehow end up being treated as NON- S Corp tax classification, if the S Corp election is revoke for failure to meet any of a number of stringent criteria.