Have a client with an LLC taxed as a partnership since about 1999. He wants to have Inc after his company's name. (It's a losing battle. He's the 90% shareholder, and he's going to do it.) Usually, I'd talk to such a client about an S-Corp, but this one seems better for a C. He has family medical insurance premiums paid by the company of about $25,000/year. A colleague does his personal return (I do the company) so don't have access to some things like his wife's W-2 and investment income, but his guaranteed payments before medical are over $170,000; and he's been taking more out of the company to pay his taxes. What are some of your thoughts on S vs. C?
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To bad our
long lost friend Oldcranky isn't around. When it came to corporations his knowledge was terrific.
If you client is pulling out most of the earnings and he didn't have "hot assets" in his business, I could go with the C Corporation.
The biggest obstacle can be when the client wants to sell. This can cause large gains taxed at a ridicoulous rate at the corporate level and then getting smacked again at the personal level.
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