LLP to LLC

Forum|Forum|6 years ago
January 2, 2020
2 replies
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We currently have a 2 person LLP. My 85 year old father is retiring. I'll be continuing, but I'm thinking switching to a single person LLC and being taxed as an S-Corp is the way to go. Would I need to file form 8832 or 2553? What if any forms would I need to file with the state to make the switch from LLP to LLC? I'm based in Vermont.

Anonymous_

Level 15

You absolutely need local legal and tax counsel for this transition on the federal and state level.

See https://www.avvo.com and https://taxexperts.naea.org

In order to elect S corporation status, eligible entities need to file Form 2553.

See https://www.irs.gov/instructions/i2553#idm139773144446592

Carl

Level 11

YOu need legal help with this.

Basically, the LLP will be closed permanently and forever. All LLP assets and inventory has to be liquidated. Generally, assets and inventory are "removed for personal use" by at least one of the partners. Then a final 1065 partnership return has to be filed with final K-1's issued to all owners. They'll need the K-1 for completing their personal 1040 tax return.

Next, a completely new business is opened. But I would suggest you not waste your time with LLC status if your desired end goal is to have an S-Corp. Remember, when an LLC files IRS Form 2553 to be "treated like an S-Corp", that election is for *TAX* *PURPOSES* *ONLY* and nothing else. So if your company is sued, it's the LLC that gets sued. For anything *outside* of taxes including all non-tax legal matters, the S-Corp does not exist.

So seek legal counsel on this and just open an S-Corp from the get-go and be done with it.

Jeff2112Author

Level 2

Funny, not really, a local tax service suggested the LLC w/S-Corp declaration, but I'm here because it didn't sound quite right. Can I do a straight S-Corp with only myself? As far assets & inventory, Dad's giving it all to me. We have one 2 year old service vehicle, a bit of stock on hand(we sell/install/repair consumer electronics, mainly Dish, DirecTv & off-air antennas). We don't subcontract to anyone. Various hand tools collected over the years, etc. No property. We've always operated as a call in business and I'll continue to going forward.