Innovative Strategies For Winning Tax Controversies, Business Structuring And Estate Planning

When Are Limited Liability Companies A Poor Choice?

  • Non-pass-through entities. When there is a need to retain income in the business, a “C” corporation is better than an LLC.
  • Phantom income problem. When a business is retaining its earnings to invest in machinery and equipment, pass-through entities such as an LLC could result in phantom income. A “C” corporation is a better choice.
  • Pension and retirement plans. A “C” corporation is better for many retirement plans. In addition to maximizing retirement plan benefits, which include borrowing from such retirement plan, a “C” corporation would probably be better than an LLC.
  • International Businesses. Although for management purposes an LLC may be appropriate, the foreign government may have unfavorable tax treatment.

You can reach Ronald J. Cappuccio, J.D., LL.M. (Tax) by calling 856-665-2121 or sending us an email.