Tax Implications Transferring Money Between LLCs

Tax Implications Transferring Money Between LLCs


(energetic music) – [Toby] Are there tax implications to transferring money between my two LLCs? – [Jeff] Uh, assuming
these are disregarded LLCs, disregarded to you personally, there’s really no
implication, tax implication. It’s more or less a loan
from one LLC to the other. And the underlying person behind
on these loans is you, so. – [Toby] Mm-hmm. – [Jeff] So you could almost
treat it as a distribution to you and then a
contribution to the other LLC. There’s nothing really going
on between the two LLCs. – [Toby] You know, it always depends. So you remember, LLCs don’t exist. – [Jeff] Right. – [Toby] So, when I put an LLC up, I mean, just say I draw up a little LLC. I’m going to write hate
letters to Microsoft right now. Um, so I have LLC, and LLC. But the IRS says, what is it? What if it’s C corp and a C corp? Are there tax implications? The answer is yes. If I move money from
one C corp to another, I got to figure out
whether that’s a payment, whether it’s a loan, maybe it’s, here’s me standing in between ’em, and it pays me W-2, and then
I contribute this as a loan. There are tax implications to that. – [Jeff] Right. – [Toby] Fair enough? Now, what if it’s S corp, C corp? The S corp, that could be
deemed as a distribution, and it doesn’t matter whether – – [Jeff] ‘Cause it’s not taxable. – [Toby] It’s not taxable,
’cause this is a pass through. Remember, this is pass through. And then I put the
money in here as a loan. There’s still tax implications,
but there’s no tax for taking it out over
here, like there’s nothing, there’s no tax for taking
it out of the S corp. Now I change that up a little bit. And what if this is a partnership, and this is a sole proprietorship? Then there’s, since I can’t be
an employee of my own entity, of my own partnership. My handwriting stinks. There’s zero tax implication to put money in and to put it out. When you’re dealing with real estate, more often that not, we’re
dealing with partnerships, and disregarded entities. It’s not a sole proprietor, it’s just real estate
investors, schedule E. In which case, there’s
also no ramification. That’s why it’s really
easy to have real estate in an LLC that’s either taxed as a partnership or disregarded. That make sense? – [Jeff] Yep. – [Toby] Did I miss anything? – [Jeff] Nope. – [Toby] Does the purchase of land count as a business startup cost? – [Jeff] Purchase of land is usually a purchase of inventory. – [Toby] Yeah, the answer is no, you can’t depreciate it, and it’s a non-deductible cost. So it’s a, you have bases in it. You write it off when you sell it. – [Jeff] Yeah, so you’re
either going to be holding it as an investment
or you’re going to be parceling it out and selling it. Then at that time, it’ll be a deduction against what you sell it for. (energetic music)

2 thoughts on “Tax Implications Transferring Money Between LLCs

  1. I want to set up a brokerage account using an ein number,not my social.E-Trade doesn't allow single member llc's &S Corps to setup accounts without using a social security number.How can I get around this?

  2. Why can't an owner of a partnership work for himself?what is the tax difference and cost/benefit of an LLC taxed as an S Corp versus LLP? I'm not seeing videos about that here on Youtube. thank you.

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