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    2 Replies Latest reply on Nov 17, 2011 9:21 AM by dublincpa

    C-corp owns LLC subsidiary: How does the cash flow work?

    BurmeseKitten Newbie

      I'm trying to figure this out but am having a tough time finding information.




      A C-corp creates a subsidiary LLC.  My understanding is that all profit from the LLC simply passes through to the C-corp and the c-corp pays taxes on the profit.  I understand that typically any profit is subject to income tax, regardless of is the profit was distributed partially or in it's entirety.  Would this be the same with the C-corp in that the C-corp would simply pay income taxes on all the profit, even if some of the money stayed in the LLC as retained earnings?  And is the income tax rate based on if the LLC by itself was profitable or the C-corp?  Where even if the LLC made money, the C-corp, even with the distribution from the LLC, did not.  So does the C-corp still pay income taxes on the LLC's earnings?


      Sorry if this was the most coherently written question but hopefully you all will understand it.  Thanks!