Conversion Services.
Is now the time for your business to undergo a conversion? Do not fall for the document handlers or inexperienced CPA or Attorney that will not analyze the aftermath of a conversion. Let our firm put your mind at ease by doing the necessary due diligence based on the size, age and volume your business
Conversion services.
Is now the time to convert your existing business entity?
How to Approach your current situation
The business entity you choose as your starting vehicle is not always the best solution for long term planning. We have developed
a conversion service to help you determine whether converting to existing business entity is right for your companies future. We base our analysis on addressing the following
The American Jobs Creation Act of 2004 (AJCA) introduces much sought-after liberalization of Sub Chapter S corporation/LLC rules. Now more companies will be eligible to elect S corporation status and the S Chapter S Election regime should work more effectively. Generally S corporations/LLCs are subject to only one level of tax, thus enhancing the after-tax cash proceeds that shareholders may realize currently and upon the sale of the company. These legislative changes, mostly effective for tax years beginning after December 31, 2004, should make the Sub Chapter S election attractive to more partnerships and Sub Chapter C Elections by:
• Increasing the number and types of eligible Owners. Sub Chapter S Entities can now have up to 100 owners, an increase of 25. Certain members of a family group can elect to be treated as one shareholder. Unexercised powers of appointment in a small-business trust that is an eligible Sub Chapter S owners are to be disregarded for purposes of counting the number of potential current beneficiaries. A Sub Chapter S Entity can have as a owner an IRA or a Roth IRA, subject to certain limitations.
• Providing for a more effective application of many substantive S Election rules. Sub S Entity owners can transfer their personal losses, suspended due to lack of basis, to a spouse incident to a divorce. Beneficiaries of qualified subchapter S trusts can now use suspended passive and at-risk losses against the gain on the disposition of the S Entity stock.
Interested in changing your existing corporation into an LLC, or LLC to a corporation Timing of the election and selection of a year-end are issues that companies considering the conversion need to discuss and resolve early in the process. A C corporation that wishes to convert must make an affirmative election to do so. That election must be made within 75 days of the first date the S election is to be effective. The electing company must meet all of the S Entity eligibility requirements as of that date. This is important, because it often takes time to resolve complicated issues that can arise in preparation for the election. If your company is considering the conversion to S Entity status, The Law Offices of Nick Spradlin can.
How to Approach your current situation
The business entity you choose as your starting vehicle is not always the best solution for long term planning. We have developed a conversion service to help you determine whether converting to existing business entity is right for your company’s future. We base our analysis on addressing the following issues:
• Assess your corporation/LLCs eligibility
• Impact of conversion on your current estate plan
• Impact of conversion on utilization of C corporation attributes, such as net operating losses
• Impact on year-end, including converting to a required taxable year
• Assessment of the cost to convert, including any built-in-gains tax exposure, LIFO recapture and future exposure to excess passive investment income tax
• Assessment of eligibility and desirability of electing QSub status for domestic subsidiaries
• Impact of conversion on foreign operations
• Impact of conversion on state income taxes and on shareholders’ estimated taxes.
After addressing the aforementioned issues, we will Advise you whether your business would benefit converting your current entity. Our deliverable will be thorough and can numerically illustrate any potential after-tax ash-flow savings, annually and on a present value concept, to your company and shareholders as a result of the S election. We will also discuss the impact on future compliance and make tax-planning recommendations on how to address any issues that we identify during our analysis. Should we recommend that your company elect to be treated as an S corporation, we can follow up with several high-level consulting proposals that would explore significantly enhancing the benefit of the Selection, including planning for:
• Valuation services to determine the impact of the built-in-gains tax on the company
• Estate and business succession.
• The domestic manufacturing deduction
• The use of an IC-DISC for export sales and transitional ETI
• A review or calculation of earnings and profits of corporations for excess passive income issues
• Most efficient state tax structure Our integrated service approach delivers services that enable you to assess whether your company is best suited to elect treatment as an S corporation. when it comes to conversions we will appropriately address all issues that arise from the analysis.
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