The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Vehicles of Lampert and Kerkorian||Date: 10/19/2005 3:00 PM|
|Author: Wradical||Number: 81148 of 122667|
I want to start my own holding company, but currently don't have enough interested parties to give me money that I would probably fall under the personal holding company tax if I were to incorporate. I have noticed some sites saying an LLC like Lampert's setup avoids this tax. Is this true? I was also curious to know if Kirk Kerkorian owns all of Tracinda Corp. If anyone knows the answers to these questions or can direct me somewhere that may be more informative, it would be greatly appreciated.
This is your first post, and you want to start a holding company already!
Unless you're going issue stock that's publicly traded, or at least widely held, (over 100 stockholders), there aren't too many reasons why you'd want to be a C Corporation anymore. Only a closely-held C Corporation, most of whose income is investment-type income, is subject to the PHC tax.
S Corporations are limited to 100 stockholders. They aren't subject to the PHC tax. Neither is an LLC, which is either disregarded (if 1 member) or taxed like a partnership (multiple members).
Today, most hedge funds, exchange funds, and venture capital vehicles are LLCs. The LLC can pass through dividends at a preferred tax rate. Unlike a mutual fund, it can pass through capital losses. Short-term capital losses are passed through as such, whereas in a mutual fund, they come through as nonqualified dividends. For an investment vehicle, that's the way to go.
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