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Pass-Through Taxation for Single and Multimember LLCs Another advantage of an LLC is the owners ability to enjoy the benefits of pass-through taxation. In 1988, the IRS released Revenue Ruling 88-76 which declared that Wyoming LLCs would be taxed as partnerships even though they provide for corporate-like protection against liability. C corporations, in contrast, are subject to double taxation—once at the corporate level and again when dividends are distributed to shareholders. While the owners of corporations can achieve pass-through taxation by making an S election, S corporations are subject to many other restrictions and requirements that limit their utility in the real estate investment realm. The 1988 revenue ruling was a true game-changer because it enabled real estate investors to avoid double taxation by acquiring property through an LLC while enjoying a liability shield. Under the default tax classification rules, the IRS classifies a real estate holding company with one owner as they would a sole proprietorship, namely as a disregarded entity. As a result, income and capital gains from the LLC pass through directly to the owner, who would only have to pay taxes as an individual, while still enjoying the protections offered by the LLC liability shield. Since there is no separate LLC tax, the owner can avoid double taxation on both the rental income generated by the property and the appreciation in value of the property upon disposition. Moreover, the owner of a single-member LLC can deduct mortgage interest similar to a sole proprietor based on current IRS rules. Real estate holding companies that have several owners are known as multimember LLCs and are generally taxed by the IRS like partnerships, meaning that the LLC files an informational tax return, but does not actually pay taxes itself. Multimember LLCs also enjoy the benefits of pass-through taxation as the LLC passes its profits and losses through to its members, who report their portion of the LLCs business income or losses on either a Schedule C, K or Form 1065 with their individual income tax returns. This means that both single member and multimember LLCs offer the benefits of pass-through taxation of profits and losses and limited liability and personal protection for the owners.
You use it to quickly tell a prospective employer who you are and why you are writing to them. You can include information here about things like your areas of expertise and your career goals and how they align with the company. This is also where you let them know what position you are specifically applying for as well as how you heard about it. Are all about what skills and knowledge you have that is specific to the job you are applying for and will be bringing with you should they offer you the position. Make sure you highlight your qualifications and how they fit in with the open position. Use words directly from the job description. Again, this is not the time to just repeat your resume, use this space as an opportunity to really show them how you are the employee they have been looking for all along and how you are perfect for the job they are currently hiring for. When a company posts a job opening, they are posting what they need. What skills, abilities, knowledge and experiences are they looking for? Use this paragraph to highlight how you fill that need. This is also where you can fill in any information that might not be on your resume but which will help show why you be perfect for the position. Wrap up your letter by thanking them for taking the time to read your letter and considering you for the position. Do not forget to include how they can contact you as well as your plans to follow-up with them.
There is simply no way to eliminate all the risks associated with starting a real estate investment business, but you can easily improve your chances of success by complying with the corporate formalities required by applicable laws, even though these steps may seem tedious and somewhat confusing. If you are in the market for investment real estate, you should at least consider whether or not the acquisition through an LLC is the right choice for you. If so, it is much easier to purchase the property through the LLC to begin with, as opposed to trying to transfer the real estate to an entity at a later date where a lender might have to consent to the transaction. An LLC may not offer any more or less protection from outside lawsuits than a properly formed and operated corporation or limited liability partnership, but it does offer many other advantages that make it the most desirable form of entity in many cases, particularly with respect to real estate holding companies.
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