Converting a C Corporation into an LLC: Quantifying the Tax Costs and Benefits

Journal of Taxation, Volume 113, Number 02, August 2010

15 Pages Posted: 5 Dec 2013

See all articles by John Everett

John Everett

Virginia Commonwealth University (VCU) - Department of Accounting

Cherie Hennig

University of North Carolina (UNC) at Wilmington - Department of Accountancy and Business Law

William A. Raabe

University of Wisconsin - Whitewater - College of Business and Economics

Date Written: August 1, 2010

Abstract

The authors develop a spreadsheet model that evaluates the interplay of the present and future tax costs and benefits associated with the conversion of a C corporation to an LLC. The model discloses few situations where the conversion election is the better choice within a time value of money framework. This is true even when assuming that dividends are taxed at ordinary income rates.

Keywords: LLC, C corporation, choice of tax entity, time value of money

JEL Classification: K34, H21, E62, H25

Suggested Citation

Everett, John and Hennig, Cherie and Raabe, William A., Converting a C Corporation into an LLC: Quantifying the Tax Costs and Benefits (August 1, 2010). Journal of Taxation, Volume 113, Number 02, August 2010. Available at SSRN: https://ssrn.com/abstract=2363502

John Everett

Virginia Commonwealth University (VCU) - Department of Accounting ( email )

Richmond, VA 23284
United States

Cherie Hennig

University of North Carolina (UNC) at Wilmington - Department of Accountancy and Business Law ( email )

601 S. College Road
Wilmington, NC 28403
United States

William A. Raabe (Contact Author)

University of Wisconsin - Whitewater - College of Business and Economics ( email )

Whitewater, WI 53190
United States

HOME PAGE: http://billraabetax.com

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