Estate planning advantages of LLCs over S corporations

Article Abstract:

The estate planning advantages that a limited liability company (LLC) can provide that an S corporation cannot include basis adjustment elections when a partnership interest is transferred and avoidance of the attribution of family business shares owned by family members under IRC section 2036(b). The section 2036(b) attribution provisions, which can force the shares of other family members to be included in the estate, do not apply to LLCs. IRC sections 743 and 754 allow partnerships and LLCs to elect basis allocations when a partnership interest is transferred at death or otherwise.

Basis (Taxation)

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S corporation reform

Article Abstract:

Federal tax changes made to provisions concerning IRC Subchapter S corporations result in several improvements to the taxpayers' advantage which are generally effective beginning in 1997. S corporations may now own qualified Subchapter S subsidiaries (QSSSs) which are not separate tax entities. They may also own in excess of 80% of a C corporation's stock. The reduction in a stock's basis to reflect income in respect of a decedent was created to align treatment of S corporation stock with partnership interests. Some problems which should be addressed remain.

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Top ten reasons for professionals to consider using LLCs

Article Abstract:

The top ten reasons for professionals to use limited liability companies (LLC) to do business actually include some challenges that might be faced in conversion from partnership or professional corporation status. In some states including California, professionals cannot form LLCs. The limitations of liability have not yet been tested in most states. Clients may not be pleased with unilateral limitations on liability. It is clear that a qualifying LLC does combine pass-through taxation with some limitation on personal liability.

Partnership, Partnerships, Professional corporations, states

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