S Corporation Ownership: LLCs and Limited Partnerships The legal restrictions of S corp ownership do not address whether an LLC or limited partnership (LP) can own shares in an S corp.

Can an S corporation own a foreign entity?

No Foreign Subsidiaries An S corporation can legally own a foreign subsidiary, but the foreign subsidiary cannot achieve QSub status. An S corporation must hold a foreign subsidiary as a C corporation, and a C corporation must pay tax at the corporate rate on its earnings.

Is an S corporation a partnership for tax purposes?

How S Corporations Are Taxed. Like a partnership, an S corporation is a pass-through entity—income and losses passes through the corporation to its owners’ personal tax returns. S corporations also report their income and deductions much like partnerships.

Can a partnership be a s Corp shareholder?

Because a partnership isn’t an eligible s corp shareholder. Period. The same rule holds true for corporations, too. A corporation can’t be an S corp shareholder. So an LLC treated for tax purposes as a corporation can’t own an S corporation.

What makes a s Corporation an S corporation?

The S corporations are simply partners in a partnership. The partnership conducts the business, does an 1065 partnership return, and sends its K-1s to the S corpoations that are partners. The most recent primary source I could find in a quick search appears here:

Can a US citizen be a shareholder of an S corporation?

Partnerships and corporations can’t, for example, be shareholders. U.S. citizens and permanent residents (and a handful of other entities) can. So here’s what this means: If an LLC has multiple owners (or members) and is therefore treated as a partnership (this would be the default), that LLC can’t own shares in an S corporation. Why?

Can a LLC own or be a member of a S corporation?

The same rule holds true for corporations, too. A corporation can’t be an S corp shareholder. So an LLC treated for tax purposes as a corporation can’t own an S corporation.