I have a client who is the sole shareholder of a Sub-chapter S-
corporation. He has a potential investor who wishes to acquire a 50S%+
share of the business from him. However, the potential investor is a
non-resident alien. The investor, who is from a treaty country,
intends to get an E-2 visa but does not plan to become a resident
The alternatives I see, if this deal is to be done, is for the
corporation to drop its S election and be taxed as a C-corporation, or
for the entity to become an LLC. My main question is what are the tax
implications of changing from a Subchapter S corporation to an LLC?
The corporation is a service business and owns no real estate or
inventory. I have a pretty good understanding of the tax differences
between a C-corporation and an LLC but any comments on that topic
would also be welcome in case I haven't thought of something.
Cites of authoratative sources (code, regs, treasury pronouncements,
court decisions) would be greatly appreciated.
- posted 7 years ago