Contributed By Allen Matkins Leck Gamble Mallory & Natsis LLP
There are three main legal entities: corporations, partnerships, and limited liability companies (or LLCs). LLCs are generally the preferred entity to hold real estate.
Corporations are generally subject to double taxation: both the earnings of the corporation and dividends distributed to shareholders are taxed. Partnerships are pass-through entities, whereby income and earnings are passed through to the partners and taxed at the partner level. LLCs are by default treated like partnerships for tax purposes (ie, as pass-through entities), and are very flexible in that they can reflect myriad arrangements for economic, management, and exit considerations and strategies. Additionally, any liability that the LLC may incur generally stays in the LLC, shielding its members.