Can an S-Corp own an S-Corp?

Discussion in 'Tax' started by Trip Ives, Feb 10, 2004.

  1. Trip Ives

    Trip Ives Guest

    I have a quick question here. Can an S-Corp own another
    S-Corp (part or whole)?

    Why do I ask? I own one S-Corp and a business colleague
    owns another. Together, we want to own a third, held 50/50
    between our seperate S-Corps. If this won't work, can we
    own an LLC together insead?

    Thanks for the feedback!

    Trip

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    Trip Ives, Feb 10, 2004
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  2. (Trip Ives) wrote:

    > I have a quick question here. Can an S-Corp own another
    > S-Corp (part or whole)?


    Quick answer. No.

    There are some ways to arrange for an ESOP to hold shares of
    an S corp. There are some ways to create a subsidiary of an
    S corp. But an S corp. cannot own shares of another S corp.

    --
    Chris Green

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    Christopher Green, Feb 12, 2004
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  3. (Trip Ives) wrote:

    > I have a quick question here. Can an S-Corp own another
    > S-Corp (part or whole)?
    >
    > Why do I ask? I own one S-Corp and a business colleague
    > owns another. Together, we want to own a third, held 50/50
    > between our seperate S-Corps. If this won't work, can we
    > own an LLC together insead?


    An S Corp can't partially own another S Corp.

    An S Corp can own a partial interest in a C Corp, LLC or
    partnership.

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    Kerry Nichols, Feb 12, 2004
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  4. Trip Ives

    JMc Guest

    "Trip Ives" <> wrote:

    > I have a quick question here. Can an S-Corp own another
    > S-Corp (part or whole)?
    >
    > Why do I ask? I own one S-Corp and a business colleague
    > owns another. Together, we want to own a third, held 50/50
    > between our seperate S-Corps. If this won't work, can we
    > own an LLC together insead?


    An S-Corp cannot own another S-Corp. However, an S-Corp can
    own 100% of a corporation and elect to treat the corporation
    as a qualified sub-S subsidiary (QSub). Owning a QSub would
    be like owning an S-Corp. However, a QSub must be 100%
    owned by one S-Corp. In your case, this wont work.

    The LLC (taxed as a partnership) would be the way to go.

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    JMc, Feb 12, 2004
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