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Would this scenario work?

LLC A owns LLC B, C
All $ made on LLC B and C is passed to LLC A and then $ made on LLC A is split between two partners avoiding double taxation?

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  • 2
    In what country?
    – littleadv
    Mar 2, 2016 at 17:37
  • Presumably this is USA - But what tax status have each of the LLCs elected? (Or have they taken the default tax status?)
    – user32479
    Mar 2, 2016 at 18:50
  • 1
    @littleadv Yes, USA
    – Sunny Joe
    Mar 3, 2016 at 4:14
  • Like Brick says, an LLC can elect to file taxes as a corporation or a partnership. To avoid double taxation, wouldn't a simpler solution be to just pay taxes as a partnership?
    – Chris
    Apr 19, 2016 at 18:59

1 Answer 1

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I preface by stating that I am not a CPA and you need to check with your financial advisor(s) on this but I know some successful real estate investors that use a similar strategy as follows. They own several properties across multiple LLC's as you state above but the LLC's are owned by an S-Corp. All the LLC revenue goes to the S-Corp which is not double taxed like a C-Corp. There are also many other tax advantages to owning an S-Corp that you don't get with LLC's. Check into it with your accountant and see if this works for what you want to do.

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  • Real estate investors? Are you sure? "Real estate investor" and "S-Corp" in the same context just doesn't make sense. If any tax adviser would suggest having any relationship between any S-Corp and any passive property ownership - that would be a significant E&O liability. This is just something not to be done. Ever.
    – littleadv
    Jun 19, 2016 at 8:43

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