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Thank you Elrod. This day is always sad, but this year seemed a bit more difficult. While being reminded of the continuing suffering of some members of the department one of my guys is in the hospital with covid among other 9/11 pulmonary issues. It’s been touch and go and we’re hoping he will turn the corner soon, please say a prayer for Kevin B. Thank you everyone for all the support for fire departments everywhere. I truly believe people are not forgetting the sacrifices made that awful day.

My prayer goes to Kevin B. and all those who have suffered such a shameful event that humans can bring upon there brethren. I cannot begin to imagine the pain so many folks are going through. The stories this last weekend, that my wife and I watched on television had brought many tears and heartache to us both. May the spirit of your comrades rest peacefully upon you Bill, and again, Thank You.

Bill, Thank you for your service.

And, cbslee goes right to the heart of the matter! Perfect answer. So, your clients have legal questions but no tax questions at this time.

Your post says no income, which I assume means they are not in business, therefore no tax returns need to be filed, no EIN. Husband, wife and all of the children could all be LLC members. Basically all of the tax related questions are moot.

You originally stated that the businesses were reported on Sch C and Sch F. The trust and estate now own the businesses and report them on their separate 1041s. There was never an S corp or any corp and there isn't one now. QSST doesn't come into play here. That election is usually made when a shareholder in an S corp dies and that ownership transfers to a trust, which S corps can't have as owners. You may have over-researched this, but look at all you've learned that you never knew existed! I do that all the time and finally realize I have to drag myself away from the big, big picture and focus on the small piece in front of me.

If an S-Corp owns a C-Corp, the C-Corp would report dividends on a Form 1099-DIV that the C-Corp issues to the S-Corp. Then the S-Corp issues From K-1 to the shareholders. (This is a more complex transaction than my corporate clients have! I have only a few corporations.)

I find the question a little confusing. If I am following, the sub-s owns the LLC. The LLC has elected to be taxed as a corporation. I am assuming it is taxed as an s-corporation since a k1 was issued. In my experience, most owners of entities taxed as s-corps pay taxes on the amount reported on the k-1, and any amounts received are usually distributions rather than dividends. If they are dividends, they should be reported on a 1099-DIV and taxed as dividends. If they are distributions, they may not be taxable at all since tax on the profits earned was paid based on the k-1 at the time the profit was earned by the LLC.

Did you read, including links, the responses you've already received? Have you discussed with your client their goals, short- and long-term? Have you discussed with their lawyer? An MMLLC defaults to a partnership in non-community-property states. If NOT an LLC, husband and wife can have a QJV and file on their joint Form 1040, but that doesn't give them the protection of a separate entity that you say they want/need. They can still get good insurance for any option. Are they expecting their children to inherit the LLC? Ask the lawyer how that works in IL. (Do they get a step-up in basis or not?) Or, do they want to gift it over time, maybe a % each year? Ask your clients what their goals are. Then discuss with the lawyer how to achieve those goals.

Is the attorney confusing an LLC with a corp? An LLC is a Limited Liability Company, not a corp, and limits the individual owner's responsibility but doesn't eliminate it. A corp is a different animal altogether, and if your client ever sells the property it can become a tax nightmare to sell real estate within a corp. I agree, buy an umbrella policy.

I regret taking on new clients this season; have way too many to finish by 15 October. (Only one more partnership by 15 September, though.) I may send a couple of them elsewhere or offer them November preparation, maybe with a discount if they look like keepers after I dig into them. And, a couple of them have had two different preparers in the last two years and SE side gigs; those may get kicked to the curb if I find any funny stuff as I get into their details. As you say, shoppers!

What do you mean by reinvest? Take the former retirement distribution and invest in a fully-taxable account? Really no savings unless he can and wants to rollover into another retirement account. Anything else is a taxable distributions and then a new investment or purchase or savings or... Have him get you a copy of the plan so you can see what you're dealing with.