Entity Choice & Structuring

Read time: ~5 minutes

C corp: double tax, no loss pass-through, no QBI; better for reinvested earnings
S corp: pro rata allocations only, SE tax on wages only, ≤100 eligible shareholders
Partnership/LLC: special allocations, basis includes entity debt, most flexible
C → S: watch BIG tax and passive income tax; C → partnership = deemed liquidation (very costly)
Partnership → corporation often tax-free under §351
Getting into corporate form is easy; getting out is expensive