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What are the advantages of LLC over an S corporation?
With the single exception of requiring at least one member (owner), LLCs do not restrict the number and type of owners. The LLC, for example, is permitted to have more than 75 members.
Corporations, nonresident aliens, limited or general partnerships, estates, charitable organizations and pension plans are all permitted to be owners of an LLC.
The LLC law permits special allocations to owners of income, expense, gain and loss.
An LLC may own 100 percent of the shares of stock of another corporation, whereas the S corporation is limited to owning 80 percent, except in the case of a 100 percent owned S corporation subsidiary.
More than one class of “membership interest” (similar to stock) is allowed.
LLC owners may obtain additional tax losses from their allowable individual percentages of certain company liabilities, rather than solely through direct loans, as required in the case of S corporations.
An LLC owner may obtain additional tax advantages from a special “step-up” option, previously available only to partnerships, under Section 754 of the Internal Revenue Code.
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