COFIX wrote:

- quote -

Yes. An S corporation can own up to 100% of the stock of
another corporation, and that corporation may also elect to
be an S corporation. If it does so and meets certain
requirements, the subsidiary will be treated as a Qualified
Subchapter S Subsidiary (QSSS or Q-Sub), which is a
disregarded entity under the check-the-box regulations.
That means the sub is treated, for tax purposes, as if it
were a division of the parent S corporation and did not
exist as a separate entity.

Whether it makes a difference in your case whether you
organize this new business as a subsidiary of the old S
corporation or as a new S corporation with the same
ownership as the old one is a question that cannot be
answered without full and complete information. As David
Woods suggested, you should consult a qualified professional
before making any decisions. In fact, you should have done
so before you ever organized an S corporation in the first
place.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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COFIX wrote:

- quote -

As I understand your question, you are starting a business
in which you will own 50% and your partner's S-Corp would
own 50%. If those facts are correct, then the new business
can't be an S-Corp.

One S-Corp cannot hold a partial interest in another. Your
partner's S-Corp can own 100% of another S-Corp or a partial
interest in a C-Corp or an interest in a partnership. Your
partner's S-Corp can't hold a 50% interst in your business
if you want it to be an S-Corp.

On the other hand, you can form an S-Corp in which you own
100% and then form a partnership with you friend's S-Corp in
order to operate the business.

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"COFIX" <djcexp[at]msn.com> wrote:

- quote -

Possibly, if the existing s-corp is the sole shareholder.
Otherwise you can't have a corporation as an s-corp
shareholder. Seriously recommend you hire someone to guide
you on this.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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I want to start a new small business and have the goals of:
1) separating my private holdings from the business, and 2)
only be taxed once - earnings from the business being taxed
as personal income. The owners of my business would be me
and my partner's business - currently a S-Corp. Can the
business I start be a S-Corp also?

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