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    2 Replies Latest reply on Dec 1, 2008 1:39 PM by mirror_nyc

    Merging an exisiting LLC into a NEW C-Corp - How to ?

    mirror_nyc Wayfarer

      Scenario:
      My sister owned a New Jersey LLC (filing taxes as a sole-propietor on Schedule C). I created a new C-Corp in New Jesey (myself as sole owner of 100 shares) We merged the LLC into the C-Corp with C-Corp as the surviving entity. I'm planning to give 40 shares (i.e 40% of the outstanding shares) of the C-Corp to my sister in order to make it a tax-free transaction (reorganisation) Is this recommended ? The FINAL plan is for my sister to eventually transfer the entire shares / business to me ith no money-transaction involved.

       

      The C-Corp was started with no inital capital. We intend to continue the existing business of the LLC through the C-Corp (we have no physical assets - just a business checking account)

       


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      Question 1: How do we achieve this transfer of 40 shares - Do i simply file an ammendment in the articles of incorporation and add my sister as the owner of 40 shares ?

       

      Question 2: Do we simply request the bank to rename the C-Corp as the NEW owner of the checking account (??) or close that account and open a new one ? How do we recognize the "DEPOSIT" transaction for the purpose of the C-Corp Taxation ?

       

      Question 3: When we file tax for the C-Corp, how do we treat the cash and transactions of the LLC that have been recorded year-to-date ?
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      We are a very small company so would appreciate a simple way out - I plan on using turbo tax for my taxation (sounds plausible ?)

       

      any guidance would be appreciated,

       

      Mirror