USA Client is incorporating his existing LLC and bringing in some new co-owners. Unsure how to book.

[ToenailClipper]

My client has been sole owner of an LLC for several years. He's forming a corporation and bringing in new business partners. He'll own 51% of the corporation. The corporation will be legally filed as being formed from the existing LLC. However, it is getting a new tax ID and Employer ID.

I'm not sure how I should prepare the books to reflect the transition from the LLC to a corporation. Should I close the LLC books completely and start new books with opening equity and assets entries? Or should I just add new equity and asset accounts for the new owners and their contributions to the existing LLC books? Is there a difference in how using either approach will impact taxes?

 

[Drmdcpa]

New company, new set of books. Accounting should not alter tax effects.

 

[ToenailClipper]

New company, new set of books. Accounting should not alter tax effects.

Thanks. That's what I thought but I was unsure since it's being incorporated as a converted entity from the original LLC and not as a new standalone entity.