Purchase LLC vs Corporation

QuestionC-CorporationLLCS-Corp
Type of OwnershipStock, there may be different classes.Membership Interests. There may be different classes of membership.Stock, but only one class. But can have voting and non-voting.
Eligible OwnersNo restrictions.No restrictions.100-shareholder limit. No non-individual and no non-resident alien shareholders
ManagementManaged by director(s) and officer(s).Managed by all members or designated manager(s).Directors and officers.
Allocations of OwnershipNo. Dividends must be paid based upon stock ownership.Permitted if the allocations have substantial economic effect.Income, gain, and loss pass through to the shareholders based on percentage of shares owned.
Liability of OwnerThere is limited liability for shareholders, officers, and directors.There is limited liability for owner(s) and manager(s).There is limited liability for shareholders, officers, and directors.
DurationIndefinitely.Dissolves at the time specified in the Operating Agreement, or upon the loss of a member, unless other members agree to continue.Indefinitely.
Transfer of OwnershipShares freely transferred.There maybe restrictions under certain state laws.Shares can be transferred only to eligible S corporation shareholders

 
 

Tax InformationC-CorporationLLCS-Corp
Tax RateGraduated Tax rates from 15% up to 39% apply to taxable income. Personal Service Corporations are taxed at 35% of all income.There is no tax to the LLC on LLC income. All profits or losses pass through and are taxed to the members.There is no tax except in two limited circumstances: (1) Recognized built-in gains and (2) Excess passive income.
Pass Through of LossesLosses not passed through.Losses passed through to members, subject to certain restrictions.Losses passed through to shareholders, subject to certain restrictions.
Fiscal YearMay use any fiscal year. Personal Service Corps must use a calendar year, subject to certain exceptions.Must use tax year of members having a majority interest in the LLC, or the tax year of all principal members if there is no majority member.Must use calendar year, subject to certain exceptions.
Liabilities and BasisNot increased.Increased.Not increased.
Liability of OwnerThere is limited liability for shareholders, officers, and directors.There is limited liability for owner(s) and manager(s).There is limited liability for shareholders, officers, and directors.
Fringe BenefitsShareholders – Employees are eligible for most.Members are ineligible for certain ones.2% shareholders are ineligible for certain ones.
Tax Upon SalePotential double taxation. Corporation is taxed on sale of assets, shareholders taxed on dividends or capital gains tax.Single tax at member level upon sale of appreciated assets. Generally, no tax on distribution of appreciated assets.Single tax at member level. Potential built-in gains taxed if corp. had appreciated property at time of S corp. election.