LLC Frequently Asked Questions

[Joshua D.]

I thought we'd start an FAQ for people interested in learning about LLCs. We'll share important posts and blog articles about these structures here. If there is an article or thread you think worth adding, please post it here.

Thanks.

Frequently Asked Questions / Articles:
- Series LLCs and Real Estate Investing: A Primer
- When to form an LLC
- LLC or LLP? Which Entity is Best to Protect my Rentals?

[Greg Boots]

Robert,

I agree with a majority of the post. It is better to flip in an entity taxed as a corporation.

The article doesn't address the fact that the LLC can elect to be taxed as an "S" corporation and you have the same tax result through the LLC as you would in a tradition "S" corporation.

One issue I disagree with in the article is the percentage of earned income that needs to be claimed. The IRS is cracking down hard on entities taxed on "S" corporations where the salary is not reasonable. I doubt that the IRS would classify only 20-30% of income as salary as reasonable. A more realistic figure is 70-80% as salary and 20-30% as a passive distribution/dividend.