Ineligible shareholders in an S corporation are corporations, partnership, many Limited Liability Companies (LLC), Limited Liability Partnerships, ineligible trusts, and nonresident aliens. Certain single-member LLCs can be eligible shareholders of an S Corporation. See our blog on Eligible Shareholders,
Meeting the One Class of Stock Requirement of an S Corporation
An S corporation can only have one class of stock. If it violates this requirement, it may cause the corporation to lose its eligibility to be an S corporation. An S corporation is treated as having only one class of stock if all of the outstanding shares of stock confer identical rights to distribution and… …Continue Reading
How is an LLC Classified for Tax Purposes?
A single-member LLC that does not file a classification election will be classified as a disregarded entity. Income and expenses from the business will be reported on Schedule C with the owner’s income tax return. The member has the option for the LLC to not be classified under these default rules by filing an election…. …Continue Reading
Found $30,000 Tax Return Error
Oldenburg Accountants & Advisors acquired a new LLC client that was filing as a sole proprietorship. Their former tax preparer made a $30,000 reporting error. They used the figures from the client’s QuickBooks file without reconciling and tying out the accounts. He just entered the QuickBooks numbers into his tax software. The first step in our… …Continue Reading
