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  • 1.  Disregarded Entities

    Posted 09-09-2013 12:01 PM
    I have a client who owns 2 single member LLC entities which are treated as disregarded entities and for which the client includes a Schedule C for each entity on the form 1040. This client is considering purchasing an existing LLC which is currently treated as a partnership and having the 2 single member LLC's as the partners in the purchased entity. The client would prefer that the purchased entity file a partnership return and issue K-1 forms to the 2 LLC disregarded entities.
           I am concerned that the purchased entity would also be deemed a disregarded entity since the proposed owners are disregarded entities owned by the same individual. I know that the taxable income result would be the same either way. I have not found any item directly on point but I think that since purchasing disregarded entities do not exist for tax purposes the purchased entity would also be disregarded. What do you think? Thank you for your help.
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    Kenneth Altman
    KENNETH N. ALTMAN, CPA
    Plainview NY
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