In this episode of Coffee with Carl, attorney Carl Zoellner talks about traditional corporations vs. LLCs and the Section 1244 stock loss option.
Updated September 24, 2021
If you’ve ever been to one of our Tax & Asset Protection Workshops, you know that LLCs are entities recognized by states, but not by the IRS. When it comes to LLCs, you get to choose how the LLC is taxed. This is part of the great flexibility LLCs offer. The tax options for LLCs are sole proprietorships, partnerships, S-corporations (S-corps), and C-corporations (C-corps). When it comes to traditional corporations vs LLCs, what’s the difference? Both LLCs taxed as C-corps and traditional C-corps have similar costs. Plus, both entities require about the same amount of work to remain compliant. Traditional C-corps, however, offer one benefit that LLCs don’t: the 1244 stock loss option.
The 1244 stock loss option can be a game-changer when it comes to how much money can be saved. The 1244 stock loss option protects your assets from possible pitfalls in the future. This means that, if you ever have to shut down your business for any reason, you can claim any start-up expenses (like education) as losses on your personal tax return. This is a way to safeguard your initial investment from any future circumstances, and it’s only available to traditional C-corps.
Watch now as Carl covers the Section 1244 stock loss option for traditional C-corps and how to recover start-up expenses, like real estate investing education. He breaks down the differences and similarities between traditional corporations vs. LLCs taxed as C-corps.
Resources mentioned in this video:
If you have any questions, comments, or feedback about this episode, let us know at cwc@andersonadvisors.com.
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