Pass-through Entity Consulting

Entities (like  LLCs) classified as partnerships or S corporations for tax purposes, also known as pass-through entities, offer businesses the opportunity to structure flexible economic deals while paying only a single layer of tax, as opposed to the double layer of tax paid by C corporations. Additionally, pass-through entities are eligible to make use of the section 199A deduction that can reduce their effective tax rates.

Flow-through entities provide opportunities for businesses to create deals capturing both the desired economic and tax outcome. The right advisor can help with the following:

For Partnerships

• Assisting with partnership agreements, including understanding and interpreting key tax provisions
• Assessing eligibility for the section 199A 20% deduction
• Helping you buy or sell a business held by a pass-through entity
• Modeling the economic and tax allocations stemming from a deal, including computations of different economic returns pursuant to a “waterfall” calculation
• Calculating basis step-ups from a purchase or redemption
• Maintaining capital accounts
• Using partnerships to access cash in a tax efficient manner
• Assisting with the allocation of partnership liabilities

For S Corporations

• Determining qualified shareholders
• Allocating income properly
• Converting from an S corporation to partnership or partnership to S corporation
• Assessing eligibility for the section 199A 20% deduction
• Determining tax and at-risk basis

Eide Bailly’s team of experienced tax attorneys and accountants can help you with all phases of an engagement, from admitting a new partner or shareholder to wrapping up and liquidating a business. We take pride in understanding the unique facets of your business and ensuring you know how particular tax provisions may benefit your situation.