What is the process of doing a contribution

Assignment Help Business Law and Ethics

Reference no: EM133215979

Case: To provide background: My spouse and I are sole owners / sole employees of two businesses in the USA:
Business "A" is a single member LLC with S-Corp election that is profitable.
Business "B" is a LLC that is not profitable, and has taken a loss some years.

I am considering transitioning B into a qualified subchapter S subsidiary (QSub) under A.

My understanding is that I can have B transition into a Qsub by contributing my ownership to A. I would file form 8869 for Qsub election and a final year tax return for B. Profits/losses of B will then flow to A, meaning B's losses would offset A's profit prior to reporting out on a K1 or profit distribution.

Question 1. What is the process of doing a contribution of B to A?

Question 2. Is there a better method to consider than a contribution (selling, forming a 3rd company and bringing B and A to that one prior to Qsub election)?

Question 3. Aside from form 8869, along with file final tax return, is there anything else I am forgetting that needs filed / done for the process?

Reference no: EM133215979

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