Can An Llc Be A Qsub? - Askinglotcom 2020-2024

Can An Llc Be A Qsub? - Askinglotcom: What You Should Know

When the stock of a Sub is held in a non-S corporation, the Sub is not treated as an S corporation. However, an LLC is treated as an S corporation if it holds stock as to which it is the beneficiary. The taxable income and deductions of an LLC, its individual members, and each person associated with any such member (other than the holder of the Sub if the holder is not an individual) will be determined on and in accordance with Section 1242 of the Code. Section 482a(l)(2)(B)(i) provides, in part, that the taxable income of any person who is treated as a C corporation shall not be reduced (or, except to the extent provided in subparagraphs (C), (E), and (F), increased) because of holding a stock of an S corporation. This paragraph does not apply to a Sub unless the person is treated by its own rules (including rules of construction of s. 478(c)) as holding a stock of a C corporation subject to paragraph (B). If a Sub is held by more than one person, but one person holds any interest in the Sub and that interest is not in the same class of stock that is held by the Sub, the Sub will be treated in the same manner as if the interest in the Sub were held in the same class of stock as the Sub if the person holding the Sub is not an individual. If two or more persons are treated as holding a stock of an S corporation with respect to which the person holding the Sub is not an individual (see Rule 846(a)), only the income to which each such individual is entitled is apportioned to the Sub in proportion to that individual's holding in proportion to the holding of the stock. If all such individuals are treated as holding stock of an S corporation with respect to which the person holding the Sub is not an individual, all the Sub's income, gain, loss, deduction, and other tax effects (but not its gross income, gain, loss, deduction, and other tax effects) are apportioned to the Sub in proportion to that individual's holding in proportion to the holding of the stock. This article explains, in general terms, how this works in practice.

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