Should I Convert to a C-corporation?

By Marguerite Moore

With the passing of President Trump’s “Tax Cut and Jobs Act,” many businesses are asking whether to change from a pass-thru form of organization to a C-corporation to take advantage of the tax savings provided in the law.  Under the Act the tax rate for a C-corp is reduced from 35% to 21% while the pass-thrus, S-corps, partnerships and LLCs, will still be taxed at the same rate as before.

Even within the general category of pass-thru organizations, there may be advantages to switching to a different type of pass-thru.  While the pass-thrus of similar businesses may have the same economics, they may have different tax results.  Business owners may want to consider looking at whether they are in the right kind of pass thru.  But before considering a switch to another pass-thru or to a C-corp, you are well advised to speak to your tax accountant.

While there are still some gray areas in the new legislation, there may be technical corrections as the year progresses.  The IRS is expected to issue answers to frequently asked questions with guidance that will likely influence how nuances in the law are interpreted.

For a further discussion of the effects of the “Tax Cut and Jobs Act,” read the article published by EisnerAmper.

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