topic LLC owned 100% by C-Corp - Tax Return and COA Question in Business & farm

LLC owned 100% by C-Corp - Tax Return and COA Question

foster2015 — Wed, 28 Oct 2020 21:29:22 GMT

If we have an LLC that is owned 100% by a C-Corp is it considered a disregard entity for tax purposes since it would be owned by a single member? Would you have to file form 1122 with the IRS or just file the 1120 tax return for the C-Corp and include the LLC's revenue, expenses, income, and etc. on the C-Corp's 1120 form?

I do have an inquiry to our CPA, but wanted to put this out there since I know others may have similar questions over time.

Also what equity accounts would the LLC have since it is owned 100% by the C-Corp? Would it have: Member Equity, Member Contributions, and Member Draw?

I'm trying to wrap my head around how money would move between the parent and child company given that it is not a person.

I am new to this so appreciate your patience with me.

Re: LLC owned 100% by C-Corp - Tax Return and COA Question

M-MTax — Wed, 28 Oct 2020 22:32:16 GMT

An LLC that is owned 100% by a C-Corp is a disregarded entity for tax purposes and would not have to file form 1122.....just the 1120 tax return for the C-Corp which would include the LLC's revenue, expenses, income, etc.

Re: LLC owned 100% by C-Corp - Tax Return and COA Question

Rick19744 — Thu, 29 Oct 2020 15:25:05 GMT

I agree with @M-MTax in that the C corporation does not file a form 1122.

This SMLLC is not a subsidiary since it is a disregarded entity for tax purposes.

This SMLLC is treated as a division of the C corporation. If you want, you can set up separate books and records internally to allow you to determine profitability levels, etc.

While the facts are limited, not sure the overall goals and what other operations are going on within the C corporation. Having the one on one with your CPA should help provide a better understanding.