Tax setup for a diregarded SMLLC owned by another disregarded SMLLC?

[inhizeyez]

Looking for guidance as I've scoured the internet and I can't find this answer. Thanks.

I'm planning to form a holding company as a Single Member LLC. It will be 100% owned by a revokable trust. Let's call the holding company "HoldingLLC". It will be disregarded, and because the trust is a passthru, HoldingLLC's profits/losses will show up on Schedule C of my my own personal 1040 tax return.

Next I will form LLCs under the holding company which will also be SMLLCs and disregarded.

Let's call one of those LLC's 'SubCompanyA'. Another one will be 'SubCompanyB'.

My question - how would I do taxes for SubCompanyA and SubCompanyB?

Would I list their profits on my own personal 1040 schedule C, in addition to the profits for the holding company?

Or would I add the profits of A and B to the P&L for HoldingLLC, and only list HoldingLLC on my personal schedule C? If this is appropriate, how does the IRA 'see' the P&L for each of the subcompanies?

Thank you in advance for your wisdom.

 

[zachary1215]

@inhizeyez If it’s pass-through then it’s pass-through all the way until it’s not. Aka until it hits a taxable entity like: you (or a corporation if you changed the holding company structure). You’ll file Schedule Cs for each LLC unless any are similar in business and can be combined.

 

[inhizeyez]

@zachary1215 Thank you, everyone, for this advice.

 

[yearningforspirit]

@inhizeyez Consult a CPA and a trust and estates attorney - there are rules on how this is done, like if one company at the bottom of ownership has filed to be taxed as an s- or c-corp, the companies up the chain have to as well.

At the end of the day the disregarded entity rolls up to the personal taxes of the owner, but the structuring inside a trust is complicated and depends largely on the state laws where the trust is formed.