LLC taxed as a C corp?

[David Newcomb]

Hey folks, I'm starting to get my feet wet in the rental business and have two properties which are up and running well. I plan to add 3-5 yearly from here out.

Me and a partner have formed an LLC and are deciding if we should be taxed as an S Copr, C corp or partnership. My current marginal tax rate is 33%.

I've heard about the dreaded double taxation issue of C-corp and understand it but love the lower tax brackets for the first 75k of profit (ie. 15 and 25%) particularly in the early phases of growth of the LLC.

Here's my goal. To grow the company with retained earnings for at least 5 years. I do not plan on paying myself a significant amount of money.

Here's my proposed scenario;

Elect to be an LLC which is taxed as a C corp and grow the company with retained earnings under the 15% and 25% tax bracket. Later, when its time to start drawing out the profits, form an second LLC management company to be taxed as an S corp which manages the C-Corp properties. A minimal salary (subject to self employment taxes) will be paid by the S corp to me and remaining monies to be paid as distributions subject to my marginal tax rate and not subject to self employment tax.

Does this sound legit? Pitfalls? Have had one acct say to never put property in C-corp ever, my acct says its a smart plan.

Interested in your feedback.