I have a client who has a tank repair business that is a C corp. He wishes to start a new business that repairs and sells antique tractors. Are there any Irs rules regarding the combining of these 2 unrelated businesses and file under the C Corp? I would like to see the business separated either as LLC or corp but not combined. He would like to combine them to save fees. What is your take on this?
-
-
Is there some type of liability
inherent to either business that he may not want mingled with the other? Will there be new/different investors in the tractor business who may not want to be involved with the other business? Is there potential that he may wan to sell the original business or tractor business in the future?
Saving fees is not always (almost never) the reason to make the determination to keep two businesses together or seperate.
As for your original question, I don't see why he couldn't combine the two, but I would give it serious thought the reasons listed above, plus others that I may have omitted.
BTW, welcome to the board! -
Another consideration
With two corporations, you get two 15% brackets. That could be more than the fee increasesComment
-
If the same five or fewer individuals own at least 80% of the total stock of two or more corporations, it is a brother-sister group, and as such is required to combine their income to use one set of tax rates. (See Schedule O, Form 1120)
One person owning 100% of the stock of more than one corporation would fit this description. You cannot create a second 15% tax bracket by forming more than one corporation.Last edited by Bees Knees; 12-17-2007, 09:00 AM.Comment
-
two or one
Since most tanks are owned by the U S military (either Army or Marine corps), seems to me that he would want a separate corporation for the farm related business. It would make it easier bidding on government contracts.ChEAr$,
Harlan Lunsford, EA n LAComment
Comment