Question

Kelly Larson, a long-time client of yours, has asked for your advice. She is going to acquire several commercial real properties. Most of the properties she is going to purchase is already fully occupied. She does not want her name on the deeds of these properties because she is afraid of personal liability if someone injures themselves on her property. Therefore, she wants a separate entity to hold the deeds of the property. She also tells you that she wants to minimize her tax liabilities. Assuming she will be the only owner of this business entity she creates, you must help her make an entity choice. You tell her that the entity choice decision is never an easy decision to make but using only the facts presented here, you would recommend to her that she form a:

Multiple Choice

• LLC

• C Corporation

• S Corporation

• General Partnership

Answer 1

In order to avoid personal liability Kelly Larson should go for C corporation as there is limited liability to the extent of ownership of shares and no personal liability of any partner. Second Kelly Larson wants to minimise her tax liabilitites which is possible through C corporation a there is seperate filing for corporation and its partners and the tax rate is much lower than any other form of organisation of partnership. hence option b is correct Kelly Larson should go for C corporation.