To “C” or not to “C”

The new 2018 Tax Reform Act has many favorable changes for the small to medium size privately held business. One of those changes is a significant reduction in the tax rate for “C” corporations. There may be other possible advantages for a change to a “C” corporation in the form of deductions. These changes may prompt business entities now IRS classified as “pass through” (LLC or Sub S) entities to consider changing to a “C” corporation.

If you are considering the possible sale or transfer of the ownership of your closely held  or solely owned business within the next 5 years, you should consult with your financial and legal advisers regarding the impact that conversion from a “pass through” (LLC or Sub S) to a “C” entity may have regarding the future valuation of your company and the restrictions on changing back from a “C” entity to a “pass through” (LLC or Sub S) entity to reverse those effects .