evelynm
Employee Tax Expert

Business & farm

Converting to an S-corporation may have some other implications.   Built-in gains tax. Businesses that convert from a C corporation to an S corporation might owe the built-in gains tax. This tax is imposed if the S-corp sells assets within five years of the conversion that had increased in value while it was a C corporation. The tax is calculated on the increased value that was "built-in" at the time of the conversion.   Although you mentioned fully depreciated assets if you sell your practice there could be tax implications.

 

The main advantage of pass-through taxation is that the business itself generally isn’t subject to federal income tax. This helps avoid the “double taxation” commonly associated with C corporations, where income is taxed at both the corporate level and again at the shareholder level when dividends are distributed.  I do recommend you consult with legal before making any determination.  Here are further details:   S Corp Taxes 

 

Information regarding Quickbooks and further details here:   how-to-start-an-s-corp 

 

 

Have an amazing day. Evelyn M (CPA 20+ years)
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