Tax Implications on Changing LLC Structures

Author: A.J. Reynolds

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2028 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

When a client wants to discuss whether they should change entity types it is key to understand the tax impact of the conversion. It is not as simple as just reporting the change on the appropriate form. During this course we’ll discuss what happens when a limited liability company (LLC) adds owners or when the sale of interests leaves only one partner in that LLC. Additionally, we will address factors to consider when the LLC owner(s) wants to elect in or out of corporate status. Furthermore, Conversions to S Corporation and IRC § 351 election will be detailed. Finally, an in depth discussion on when and if an entity will need a new Federal Identification Number.

Publication Date: February 2025

Designed For
All Tax Professionals considering Converting LLCs to Corporation and or adding or removing members from LLC.

Topics Covered

• Impacts of adding member(s) to SMLLC
• Impacts of MMLLC to SMLLC
• Do you need a new Federal ID Number
• Outline converting SMLLC to S Corporation
• Outline converting MMLLC to S Corporation
• Mechanics of § 351 Election

Learning Objectives

• Identify when and or if an entity needs new Federal ID Number
• Identify the steps required converting a Multi-member LLC (MMLLC) treated as partnership to a Single Member LLC treated as sole proprietorship
• Identify tax impacts of adding a member to a Single Member LLC (SMLLC)
• Recognize how to determine tax consequences when a SMLLC converts to S Corporation
• Identify the mechanics of converting MMLLC to S Corporation

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None