Converting a s-corp to a llc

[Kevin Allen]

Hello, I have a tax question. My old cpa had me set up in a s-Corp. my new CPA, along with everyone else I’ve talked to, seems to think that I should be set up in a llc. She recommended that I leave the two str’s in the s-Corp and start a new llc for any further purposes. I’m closing in another house in a couple weeks. My real estate attorney says I should convert the s-Corp over to a llc and just have all three properties in that. But the attorney wanted me to check with my cpa before doing that. Problem is my cpa hasn’t really given me clear advice on this and hasn’t returned my calls(may need a new cpa). It’s crunch time and I need to be doing something before the closing. Has anyone ever converted a s-Corp to a llc and are there any tax implications in doing so?

[Eamonn McElroy]

You can't go from S Corp to an LLC taxed as a disregarded entity or partnership without going through a corporate liquidation. That's probably not going to be advisable, but as noted we don't know the whole picture.

The best path forward is probably going to be a new LLC taxed as a disregarded entity or partnership for all future rental real estate acquisitions. Keep the old S Corp around until all assets have been divested, then get rid of it.

Your current CPA is in the best possible position to advise you.