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Form 8869 Texas: What You Should Know
This is an example of how I would structure my operating structure for the sole purpose of utilizing Form 8869 and be treated as a Sub. Under this scenario, it is assumed that I am 100% independent of the parent corporation. What I would do is establish and maintain a subsidiary corporation within 50 miles radius of where I have my business. I would use my primary or subsidiary name for this corporation. I would make it clear to the IRS that I have my business with the primary and subsidiary name. I would also have a corporate office in the name of the Sub corporation that holds 100% of the voting power in the parent corporation. I would not create a separate Sub corporation for the sole purpose of this election. This should work because the majority of Sub corporations will hold 100% of the voting power in the parent corporation. To establish this Sub corporation, I would use IRS forms that are commonly used by sole proprietorship by creating a separate 1099S for every subsidiary corporation. This means that I could create 2 corporations called “1 Sub Corporation”. First the parent corporation creates their 1099S and the Sub. Then the Sub. Would create the 1099S for themselves. The Tax Adviser Aug 31, 2025 — I know a lot of you don't want to go on IRS Form 8869, so this may or may not be feasible. However, there is still a way to structure your Sub corporation. I'll cover how I do this in a post soon. I will post links to the documents I used to structure Sub corporations in another post. Tax Considerations Sep 26, 2025 — A parent corporation will only be able to deduct as a business expense 50% of its distribute income (DID) if the DID is attributable to the S corporation. (DID consists of dividends, interest, rent, royalties, and gross receipts for that period.) As long as the parent corporation reports the appropriate DID, the parent corporation will not be able to deduct any of its business expenses. The IRS considers this to be a significant limitation on S corporation's ability to deduct their business expenses. If the parent business owner is not a qualified independent contractor or a self-employed business owner, the S corporation would have to work through the S corporation. Sep 27, 2025 — There are also tax considerations related to Form 8869 and the Sub corporation.
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