Resisting the Lure of S Corporations

As discussed in an earlier writing, an LLC taxable as a partnership is the superior choice of entity when the entity will own Appreciating Assets. The reasons are numerous and compelling. However, some tax advisors advocate S corporations because (1) an S corporation can pay its owners W-2 income (a tax partnership cannot) and (2) dividends from an S corporation are not currently subject to FUTA, FICA, and Medicare. If the entity only provides services and has no Appreciating Assets, this lure to S corporation status is enticing.

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Historic Rehabilitation Tax Credit Transactions After The Safe Harbor

Lenders, Developers and Borrowers were all frustrated by the chilling effect that revenue rulings and court cases had on Historic Rehabilitation loans in 2013, causing delays in closings and delays in admitting Federal tax credit investors as partners of the Borrower. After issuance of Revenue Procedure 2014-12, a Safe Harbor for Historic Tax Credit Transactions, a resurgence of Federal investor interest is now apparent; however, structuring loans for these transactions after the Revenue Procedure involves tackling new territory.

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