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I have an LLC with S-Corp tax status.

I am working for a startup and part of my compensation is stock. I am receiving 25% of this stock after 6 months and the rest is being awarded monthly after 6 months. I will receive the full amount in 3 years.

The cash compensation is being paid out to my LLC.

Are there any special consequences for getting stock through an LLC? I'm not clear on what happens with these shares with a pass-through entity and how I am taxed on them.

Is it more tax beneficial to have these shares awarded to me personally?

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Frankly, your whole structure doesn't make much sense to me. I know why some people choose to work "through" a pass-through entity, but - generally speaking - it's an iffy proposition.

In your case, it seems you work "through" an LLC which elected to be treated as corporation and then elected to be treated as a Sub S corporation; why??? Also, was your "employment" agreement entered into with your LLC? Is the stock grant made to the LLC? Do you personally have an employment agreement with your LLC?

And an FYI - unlike an LLC, making a distribution of appreciated stock to a sharehodler results in recognized gain to the S Corp even with no cash involved. Not a good outcome.

I believe you should talk to a professional before you do anything further.

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    Agreed strongly with this, and especially the last sentence. I think the OP may be in over their head. Professional help is required.
    – Grade 'Eh' Bacon
    Commented Jan 7, 2020 at 16:47
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    All of the tax benefits of an ISO are unavailable if the stock grant is made to anything other than an employee, and the LLC is not an employee of the startup.
    – David Schwartz
    Commented Jan 7, 2020 at 19:35
  • Basically, I'm receiving stock as a contractor. I've normally just worked for cash which is straight-forward.
    – Berry Blue
    Commented Jan 8, 2020 at 15:12

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