I would appreciate any help on this. It is a little long.
I am working on a new clients return. His new company is setup as a LLC but he elected to be taxed as a S-Corporation. Company started in Sept. 2005. Now to my understanding LLCs have members which own interest in the company.
1) Does this mean there is no stock issued, no stock basis. Only the "member's interest" is tracked? Paid in Capital? I'm stuck on s-corporation rules.
Also the husband has the wife listed as a member. Now he wants to be the majorty owner. The previous CPA they started with has listed Common Stock (Member Interest) of $500. $499 for husband $1 for wife.
2) Should I list on the K-1 for the line that says percentage of stock ownership... 99% for husband and 1% for wife. Is this correct?
He wants to be majority and then if someone wants to buy "interest" in the company they take it from him.
3)Again, if someone bought into the company they would be buying "member interest" not stock... correct?
Side Note...As I said they had went to a CPA and he entered information in QuickBooks. The husband contributed $10,000 to start up the business. But the previous accountant entered $9500 as loan from shareholder. . then put $499 as husbands "capital stock" should be member interest and the wife as $1. The CPA setup QuickBooks more as a S-Corportion listing shareholders instead of members. First time I've dealt with a LLC being taxed as a S-Corp.
Thank you for any help
Dany
I am working on a new clients return. His new company is setup as a LLC but he elected to be taxed as a S-Corporation. Company started in Sept. 2005. Now to my understanding LLCs have members which own interest in the company.
1) Does this mean there is no stock issued, no stock basis. Only the "member's interest" is tracked? Paid in Capital? I'm stuck on s-corporation rules.
Also the husband has the wife listed as a member. Now he wants to be the majorty owner. The previous CPA they started with has listed Common Stock (Member Interest) of $500. $499 for husband $1 for wife.
2) Should I list on the K-1 for the line that says percentage of stock ownership... 99% for husband and 1% for wife. Is this correct?
He wants to be majority and then if someone wants to buy "interest" in the company they take it from him.
3)Again, if someone bought into the company they would be buying "member interest" not stock... correct?
Side Note...As I said they had went to a CPA and he entered information in QuickBooks. The husband contributed $10,000 to start up the business. But the previous accountant entered $9500 as loan from shareholder. . then put $499 as husbands "capital stock" should be member interest and the wife as $1. The CPA setup QuickBooks more as a S-Corportion listing shareholders instead of members. First time I've dealt with a LLC being taxed as a S-Corp.
Thank you for any help
Dany
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