Contributed By Allen Matkins Leck Gamble Mallory & Natsis LLP
Corporations are subject to double taxation: earnings of the corporation may be subject to tax, and dividend distributions may be taxable to the shareholders.
Partnerships and LLCs are pass-through entities, whose profits are generally taxed only at the partner and member level.
Corporations may be less costly to document than a partnership or LLC. All of the substantive terms of a partnership or LLC agreement may be subject to negotiation, which would make it more costly to document. Additionally, in certain situations, corporations may be the preferred vehicle for foreign investors of real estate because of the nature and interaction of US and foreign tax laws.