other problems you could face is that with S-Corp active members must take a reasonable salary. Failure can result in significant penalties. Probably the only exception would be if the activity was rental real estate. but then if such and there were losses, they may not be deductible because of lack of basis. with an unincorporated LLC Non-Recourse Financing (Mortgages) count towards basis but not in an S-Corp. as an unincorporated LLC, other than rental real estate, the earnings would be subject to self-employment taxes. further, an LLC might be better for certain members while an S-Ccorp would be better for other members. you really need to consult a tax pro that can go over each member's individual situation to give you the pros and cons of each.
