In the old days, before LLCs became the choice for landlords, a partner
and I invested in income property and incorporated (C-corp).
When we began to show profits and faced double-taxation, we converted
to S-corp status.
I would love to continue the conversion fest and change the S-corp to
an LLC, but tax regs won't let that happen without considerable tax
consequences, or so I've been informed.
As a consolation prize, I was wondering about the following...
When one has a C-corp, some care must be taken to to comply with
certain regulations related to corporations, such as the election of
officers, keeping annual meeting minutes, operation agreements, etc...
to not do so runs the risk of your corporation not being considered a
separate entity. Ok fine for a C-corp... but if I forego that stuff
while being an S-Corp will I expose myself to any serious risk? I think
an S-corp can also be viewed as an admission that at least in
accounting terms, the corporation and its shareholders (me and my
partner) are one and the same, that's why I think that money in the
company checking account gets counted on our individual tax returns,
even though we may not have taken a formal distribution on it. But in
terms of liability protection, do I still need to play this game of
keeping minutes, etc, so as to "be one" with the company on accounting
terms, but to "be separate" with the company in liability protection
For you folks that read the bulletins and literature, any relief on the
horizon for us dinosaur entities that didn't really have the LLC option
available to them 30 yrs ago?
Thanks for any informed repsonses.