Pros and Cons: LLC vs S-Corp

DataCruncher · Mar 15, 2009

Quote from rolextrader:

1) Yes, if you haven't elected MTM for the tax year in question.

2) Yes, if you have elected MTM for the tax year in question.

Thanks, I wanted to post some more details so I can get more clarity though:

1) loss incurred trading stocks in 2009. Generates a capital loss carryover. Gains incurred trading futures in 2010. Does the gains apply against the capital loss carryover?
No MTM was declared at all for any year.

2) loss incurred trading stocks in 2009. MTM was declared ahead of time so that you have MTM treatment in 2009 (for stocks only, not futures). You have NOL ordinary income carryforward which you carry forward to 2010.

In 2010, you leave the stock trading business and start trading futures. No MTM declared for futures. You have gains trading futures in 2010. Are the gains applicable against the NOL carryforward?

Thanks

Redneck · Mar 15, 2009

Quote from Sky123987:

A note on traders accounting.

I had an absolute horrific experience at trader's accounting, and from what I have learned is that none of them can be trusted. Now I'm not saying that redneck you have a bad structure, but they absolutely cannot be trusted what so ever.

1. I'm like 99% sure on this but, I found out the guy giving me advice wasn't even an accountant.

2. They sell you on this C-Corp / LLC model. For most people this is a complete waste of time. The only reason to make a C-Corp is so you can deduct medical expenses. You do the math, but for most people this is a headache.

3. Now keep in mind with this C-Corp, you need to keep documentation, minutes, and everything that goes along managing this sucker. After I told them I wasn't interested in the C-Corp they told me a complete lie. They tried to sell me on bookkeeping for the LLC every month, and even said that you MUST keep monthly documentation for the LLC or the IRS won't recognize this as a legal entity. Of course this is not true.

I could go on and on about the horrific experience at Traders Accounting, but all in all, is these slime bags 100% cannot be trusted. And the problem is, if they tell you "you really need to buy this" how do you know if you really need it, then you have to reserach it yourself.

BEWARE!!!!!!!!

Now you have me nervous

â although I did have an independent attorney look the arrangement over.....

And I had Legalzoom set it up

However

You can never be too careful where the IRS is concerned (and I simply deplore dealing with the IRS on anything)

Good Feedback Sir

rolextrader · Mar 15, 2009

Quote from DataCruncher:

Thanks, I wanted to post some more details so I can get more clarity though:

1) loss incurred trading stocks in 2009. Generates a capital loss carryover. Gains incurred trading futures in 2010. Does the gains apply against the capital loss carryover?
No MTM was declared at all for any year.

2) loss incurred trading stocks in 2009. MTM was declared ahead of time so that you have MTM treatment in 2009 (for stocks only, not futures). You have NOL ordinary income carryforward which you carry forward to 2010.

In 2010, you leave the stock trading business and start trading futures. No MTM declared for futures. You have gains trading futures in 2010. Are the gains applicable against the NOL carryforward?

Thanks

Sorry, I won't speculate on what the rules will be next year.

My answer applied to the laws as they now sit on the books.

Sky123987 · Mar 15, 2009

Quote from Redneck trader:

Now you have me nervous â although I did have an independent attorney look the arrangement over.....

And I had Legalzoom set it up

However

You can never be too careful where the IRS is concerned (and I simply deplore dealing with the IRS on anything)

Good Feedback Sir

You lawyer was fine, you're not doing anything illegal, it's just unfortunate your lawyer knew nothing about accounting then he would have been able to recommend you opt out of all the stuff they are trying to sell you that you really don't need.

If I were you, I'd think do I really need this C-Corp.... probably cost like $2500 / year for a tax return and all the records you have to keep going.

So if you are at the 30% tax bracket, they you need $8333 worth of medical expenses to make this worthwhile and probably more than to account for the headache of doing this.

So after you decide if you want this (which I'm assuming is probably not) just go to an accoutant you can TRUST, and take your LLC that you chose to elect as a S-Corp, and disolve your C-Corp. Then you'll save money by not paying bookkeeping fees, and you'll be able to actually trust what someone says.

DataCruncher · Mar 15, 2009

Quote from rolextrader:

Sorry, I won't speculate on what the rules will be next year.

My answer applied to the laws as they now sit on the books.

ok, fair enough. I am still confused about your answer that's why I posted more details. Replace where I wrote 2009 with 2007, and replace where I wrote 2010 with 2008.
I couldn't find the answer on Green's website.

saliva · Mar 15, 2009

Quote from Sky123987:

A note on traders accounting.

I had an absolute horrific experience at trader's accounting, and from what I have learned is that none of them can be trusted. Now I'm not saying that redneck you have a bad structure, but they absolutely cannot be trusted what so ever.

1. I'm like 99% sure on this but, I found out the guy giving me advice wasn't even an accountant.

2. They sell you on this C-Corp / LLC model. For most people this is a complete waste of time. The only reason to make a C-Corp is so you can deduct medical expenses. You do the math, but for most people this is a headache that's isn't worth it.

3. Now keep in mind with this C-Corp, you need to keep documentation, minutes, and everything that goes along managing this sucker. After I told them I wasn't interested in the C-Corp they told me a complete lie. They tried to sell me on bookkeeping for the LLC every month, and even said that you MUST keep monthly documentation for the LLC or the IRS won't recognize this as a legal entity. Of course this is not true.

I could go on and on about the horrific experience at Traders Accounting, but all in all, is these slime bags 100% cannot be trusted. And the problem is, if they tell you "you really need to buy this" how do you know if you really need it, then you have to reserach it yourself.

BEWARE!!!!!!!!

Thanks for the heads up. They make it sound so downright easy it seems almost unreal. So I was a bit skeptical. However, I would like to hear some more personal testimonies. I doubt I will use their service to prepare taxes but am looking into finding ways to better structure my trading business.

Anyone else with positive or negative feedback as far as Traders Accounting is concerned?

TraderZones · Mar 15, 2009

Quote from Sky123987:

Wow you are an idiot, or your accountant is.

First I'm not sure what you understand what pass though means. Pass through just means the income is passed on to the owners of the companies rather than being taxed at the corporate level and then at the personal level like a C-Corp (double taxation)

from... http://www.powerhomebiz.com/vol136/structure.htm

In an S corporation, only the salary paid to the employee-owner is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, there is the potential to realize substantial employment tax savings.

-----> maybe you thought that everything was subject to self employment tax because you never made anything more than what would be deemed "a reasonable salary" hence you couldn't classify for having any distributions

I will try to make this simple:

In general, S Corporations and LLCs do not pay any income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.

PERSON 1: Idiot using S corp/LLC:
ABSOLUTELY ALL their income (ALL income automatically passes through to their personal tax forms from S corp/LLC), pays federal/state/local tax + 14-15% self-employment tax. Also has all that lovely extra costs of paperwork and extra tax forms. "Protection of their assets" is idiot's dream, since if you did anything illegal or harmful, they will pierce your corporate veil and you will not have any protection. Your personal trading activities don't need the kind of protection offered by an entity.

PERSON 2: Smart person reports income on their cap gains, pays no self-employment tax. Very simple

Sky123987 · Mar 15, 2009

Quote from saliva:

Thanks for the heads up. They make it sound so downright easy it seems almost unreal. So I was a bit skeptical. However, I would like to hear some more personal testimonies. I doubt I will use their service to prepare taxes but am looking into finding ways to better structure my trading business.

Anyone else with positive or negative feedback as far as Traders Accounting is concerned?

Look it is so simple.
Form an LLC and elect for it to be taxed as an s-crop
and remember to include 1 other person.

That's it! You don't need anything else you don't want anything else. Simple!

rolextrader · Mar 15, 2009

Quote from DataCruncher:

ok, fair enough. I am still confused about your answer that's why I posted more details. Replace where I wrote 2009 with 2007, and replace where I wrote 2010 with 2008.
I couldn't find the answer on Green's website.

You won't find the answer on Green's website.

He wants you to sign up for a 30 minute consultation at $175.

My answer is as clear as I can make it for free.

rolextrader · Mar 15, 2009

Quote from Sky123987:

Look it is so simple.
Form an LLC and elect for it to be taxed as an s-crop
and remember to include 1 other person.

That's it! You don't need anything else you don't want anything else. Simple!

I concur.

Except elect to be taxed as an S Corp, not "crop."