Mike Lewis wrote:

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As opposed to having formed a single-member LLC wholly owned
by the S-corporation, right?

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I agree. It's a convenient way to hold a vacation home, at
best.

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Sorry, I can't figure out what you're asking here.

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I vote no.

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If it's truly owned by individuals, the default is 1065. If
it's a SMLLC owned by the S-corp, it's part of the 1120S.
(If it's owned by the S-corp, I'd treat all expenses as
wages to the shareholder / employees, prorated based on
their use of the timeshare, or as distributions prorated by
stock ownership if use of the timeshare was similar.)

Phoebe

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My S-Corp client advises me they formed an LLC and bought a
time-share in it. The ownership of the LLC is exactly the
same as the S-Corp. The time-share is to be used by the
shareholders for vacations. So far, the LLC has incurred the
debt to buy the time-share (25k) and payments on the debt
plus home association dues. No rent will be paid to the LLC
for use of the time-share.

As I see it, it's at best an investment with no tax
deductible expenses and is not in the business to make a
profit. Furthermore, if the only funds it receives to pay
the debt, etc., such funds will be S-Corp distributions? Do
I file a tax return on this? If so, which one? I'm sure all
of your clients call you before entering into such a
transaction:-)

mike

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