NASSAUSUFFOLK

a client (S-Corp) currently classified as Seafood Product Preparation and Packaging (NAICS 311710) is acquiring an LLC whose sole asset is a commercial fishing vessel. The LLC's business was used as a fishing charter boat. The S-Corp intends to catch fish for its own preparation and packaging as well as continuing the charter business.

The S-Corp wants to maintain the limited liability of the LLC, and the question arose as to how to report the income and expenses of the LLC as a theoretical division of the S-Corp, maintaining its limited liability and its LLC name. The  S-Corp would be the sole owner (single member??) of the LLC. I found no suggestions during my research on taxation.

I believe that the S-Corp (one shareholder) wants to maintain the LLC to keep its limited liability.

Any suggestions??

Michael Schneider 

I see the liabiity protection from the LLC as not tied to the tax reporting.  Reporting within the S-Corp does not make the protection from the SMLLC wrapper on the fishing vessel go away.  Whether the fishing vessel activity is separately stated on the S-Corp return or not, the liability protection remains.  As a SMLLC the fishing vessel operations are just a part of the S-Corp like any other S-Corp filing activity since the LLC is disregarded for tax purposes.  You could choose to identify revenue and expense items as related to fishing so you can make some distinction of the "division" but it won't change the end result - it is just a presentation issue.

a client (S-Corp) currently classified as Seafood Product Preparation and Packaging (NAICS 311710) is acquiring an LLC whose sole asset is a commercial fishing vessel. The LLC's business was used as a fishing charter boat. The S-Corp intends to catch fish for its own preparation and packaging as well as continuing the charter business.

The S-Corp wants to maintain the limited liability of the LLC, and the question arose as to how to report the income and expenses of the LLC as a theoretical division of the S-Corp, maintaining its limited liability and its LLC name. The  S-Corp would be the sole owner (single member??) of the LLC. I found no suggestions during my research on taxation.

I believe that the S-Corp (one shareholder) wants to maintain the LLC to keep its limited liability.

Any suggestions??

Michael Schneider 

I agree with Steve .  The protection afforded under an SMLLC is a legal one. How we report for taxes would seem irrelevant to me. .

i have attended a lecture where an attorney was discussing legal liability of a LLC, and in his view, and that of the lecture, was that a SMLLC had less protection than a multi member LLC, but again, i defer to the legal community on that one.

I do see a QBI  question here. Are they two separate lines of business? But i dont want to muddy the waters and detract from your original question .

Abby

I see the liabiity protection from the LLC as not tied to the tax reporting.  Reporting within the S-Corp does not make the protection from the SMLLC wrapper on the fishing vessel go away.  Whether the fishing vessel activity is separately stated on the S-Corp return or not, the liability protection remains.  As a SMLLC the fishing vessel operations are just a part of the S-Corp like any other S-Corp filing activity since the LLC is disregarded for tax purposes.  You could choose to identify revenue and expense items as related to fishing so you can make some distinction of the "division" but it won't change the end result - it is just a presentation issue.

a client (S-Corp) currently classified as Seafood Product Preparation and Packaging (NAICS 311710) is acquiring an LLC whose sole asset is a commercial fishing vessel. The LLC's business was used as a fishing charter boat. The S-Corp intends to catch fish for its own preparation and packaging as well as continuing the charter business.

The S-Corp wants to maintain the limited liability of the LLC, and the question arose as to how to report the income and expenses of the LLC as a theoretical division of the S-Corp, maintaining its limited liability and its LLC name. The  S-Corp would be the sole owner (single member??) of the LLC. I found no suggestions during my research on taxation.

I believe that the S-Corp (one shareholder) wants to maintain the LLC to keep its limited liability.

Any suggestions??

Michael Schneider