Tag Archive for Conversions

Tax Implications Of Converting An LLC To A Corporation

Converting An LLC To A C Corporation

(Per visitor request this is an excellent article we are re-posting from TaxConnections Member John Dundon)

Recently a husband/wife owned 3 LLC’s that each successfully elected to be treated as S-corporations for federal income tax purposes by filing IRS Form 2553 – Election by a Small Business Corporation. Subsequently this great couple found themselves entertaining a rather complicated buyout offer of all 3 of their LLCs. This post addresses the tax implications of converting an LLC to a Corporation as part of a buyout strategy…

Their fundamental question:

Can the LLCs do a tax deferred corporate reorganization under IRC 351-368?

The husband/wife were concerned that their LLCs electing S corporation status might not be able to engage in a corporate reorganization because the LLC’s were comprised of ‘member interests’ and they did not have any “stock” – which is a key term in IRC 368 governing statute.

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Written by | Posted in Conversions • LLC • S-Corp

Deadline for Reversing 2012 Roth Conversions Is Closing

TaxConnections Picture - VaultIf you converted a traditional IRA into a Roth account last year and are now unhappy with the results, you can reverse the conversion as long as you get it done by October 15th. Here’s what you need to know as this deadline rapidly approaches!

Reversal Basics

When you converted your traditional IRA into a Roth IRA last year, the transaction was treated as a distribution from the traditional IRA followed by a contribution of the distributed amount to the Roth account. So the conversion triggered a 2012 federal income tax bill (and maybe a state income tax bill, too) based on the traditional IRA’s value on the conversion date.

However, 1 taxpayer-friendly aspect of the Roth conversion drill is that individuals who use the calendar year for tax purposes have until October 15th of the year following the conversion year to reverse a conversion. For example, you have until October 15th of this year to reverse a 2012 conversion. That October 15, 2013 deadline applies whether or not you extended your 2012 Form 1040. Read More

Written by | Posted in United States