Suppose I register an LLC in the US and purchase stock or crypto as part of the LLC. When I sell the stock or crypto later on, I would like to use the money to buy real estate. In that case, does the LLC have to pay taxes only on the net profit of the LLC, i.e., (capital gains - money to purchase the real estate)?

Will the taxation rules be different if I purchase stock/crypto with my personal money, and later transfer the stock/crypto to the LLC? Will the taxation rules be different for stock and crypto?

  • 1
    Tax questions require us knowing the country. Dec 8, 2022 at 2:26
  • Added the country (USA) in the question
    – satya
    Dec 8, 2022 at 3:19

1 Answer 1


In the US, LLCs are disregarded for tax purposes unless explicitly elected to be taxed as corporations. Corporations can be of two kinds: S-Corporations (taxed under the Sub-Chapter S of the IRC), and C-Corporations (taxed under the Sub-Chapter C). C-corporations are the "regular" traditional type of corporate entity.

S-Corporations, similarly to LLCs, are disregarded entities. C-Corporations are separate entities for tax purposes and taxed under corporate tax regime and then can distribute net profits to their owners as dividends (which will be then taxed again under the personal tax regime - which is called "double taxation").

So you'll either end up with a disregarded entity which is ignored for tax purposes or with a corporate entity which will add another layer of taxation on top of your individual taxes.

Bottom line - there's absolutely no benefit, tax-wise, in investing through an LLC (there may be benefits other than tax related, especially if you're pooling investments with others).

In addition, your definition of "net profits" is not really how the rest of the world defines it. If you invest in asset A, then liquidate and invest the proceeds in asset B, the net profit is not B-A. The net profit is sale price of A - purchase price of A. In some very specific cases you can defer recognition of the profit if you exchange one asset with another of a similar kind (using the IRC Sec. 1031), but that is done with real estate and cannot be done with crypto.

  • Uncle Sam is clever. There's no way I could save my capital gains on crypto then :-(
    – satya
    Dec 8, 2022 at 22:41

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