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U.S., Taxation Structure election options between Parent & Operating LLCs.

Discussion in 'Business & Tax Advice' started by blotted, May 24, 2013.

  1. blotted

    blotted Newbie

    May 24, 2013
    Likes Received:

    I have 2 LLCs--rather, I own a Parent LLC (100%) which owns an Operating LLC (100%) in the State of Wyoming.

    Parent LLC: Single Member, Manager-Managed, considering C-Corporation taxation election
    Operating LLC: Single Member (capable of being a partnership if I personally chose to own a percentage of it with the Parent LLC), Manager-Managed, considering the disregarded entity default taxation election. If I chose to be a partner, S-Corporation election may be possible as I am an individual, whereas if it were solely owned by another LLC, it may not be able to elect "S" status.

    In your opinions, what are the best options to maximize the income between my pocket and my businesses pockets?

    Option A:
    Elect Parent as C-Corp & Operating as disregarded entity (pass-through) with the single member being Parent

    Option A1:
    Operating as partnership where 2 members exist, tax based on 1 member receiving guaranteed payments for their percentage of stake within the business.

    Option A2:
    Operating as S-Corp where 2 members exist.

    Option B:
    Elect both Parent/Operating as C-Corp

    Of course those are just ideas for different options of the routes I've been considering. This has been the toughest challenge in determining how I can effectively make my businesses work very well together, yet remain independent of each other while protecting tangible assets and IP. If I were to ever sell a business, it could help as well. If I were to ever bring on a non-profit business under the Parent, that too could serve well--possibly. I also would like to ultimately use the parent company to invest in other external businesses and provide to the subsidiaries it may eventually own and/or create in whole/part.

    I'm sorry this may seem a little confusing, but it's mainly because I am confused.

    Please assist!

    Thank You,
    Last edited: May 25, 2013