Anyone have experience using an LLC/S-Corp in conjunction with a C-Corp

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February 25, 2025

by a searcher from University of California, Irvine - The Paul Merage School of Business in Dana Point, CA, USA

The C-Corp adds an extra level of taxation in most cases when trying to get earnings out of the company and ultimately into your pocket. I am trying to consider all legal avenues of extracting profit with the least taxation as possible

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Reply by a searcher
from Cornell University in Chatham, NJ, USA
Yes, this is what I would recommend as well. I/We have over a dozen LLC's and 1 C-Corp for QSBS/angel investors signing SAFE note, and you can do B2B transactions between entities which would be just expense deduction on C-Corp and income on LLC so it would be single tax, but based on rest of your income and S-Corp status, might trigger some or lot of FICA so need weigh whether it's worth it. Also be sure expenses are at market rates so they are defendable. I also use one of the LLC's to pay my kids from the C-Corp to family LLC to my kids. I do like the C-Corp too cause it lets me control when to pull the money out and sometimes ill leave it in there for a couple years to time taxes vs LLC which automatically forces me to recognize all income. Also with corp tax at 21%, and maybe going down, worth balancing what side to pay the tax on. Coupled with a short term rental and material participation in an LLC with losses, you might be able to offset the dividend income potentially on your###-###-#### All the tools in the toolbox, use them as it makes sense but definitely get tax counsel advice! (this is not legal or tax advice).
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Reply by an investor
from University of Illinois at Urbana in Chicago, IL, USA
Thanks ^redacted‌ - As with most other responses I would say this is a super broad question, and really a question for your attorneys to understand the differences in structure and goals of transaction, etc. I have used all sorts of diff forms of entities, and there are attorneys who get paid a LOT of $$$$ who can structure things I never thought possible (e.g. tax free roll over of LLC shares into a new entity). But that kind of expertise is outside the scope of most deals - and certainly most deals contemplated on this site. Suggest doing some recon on ChatGPT or the like, and then talking to your counsel, seller's counsel and tax people, etc.
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