Who should own...

[TAX]

Client is considering to form S corp and LLC.

For Scorp - He will have consulting income from non real estate related activity
One share holder

For LLC - He would have Real estate related income - Rent, Rental expenses etc.
Multi member LLC

It is generally agreed that realestate should be in LLC and not in Scorp.

Issues:

(1) Should he form scorp and let Scorp become one of the members of LLC?
This way S corp will have interest in LLC

(2) Should he become one of the individual members of LLC?

(3) Should he keep scorp and LLC seperate?

Just want to know what will be tax and legal impact of decesion.

Thanks in advance!

[Unregistered]

I believe that Scrop can become member of LLC but not other way around.

[rosieea]

I believe that Scrop can become member of LLC but not other way around.

Unless it's a single member LLC not taxed as a corporation.

[OldJack]

He (2) should become one of the individual members of the LLC and (3) should keep S-corp and LLC separate. The S-corp should not be a member of the LLC for several reasons such as (A) the S-corp does not want to pay rent to a related entity as the question becomes is it exempt from social security tax or just spinning profit out of the S-corp. and (B) if one gets sued it can lead to both being included in the lawsuit.