Possible for C-Corp to invest in LLC syndication?

[Tony Lin]

One of my friends is wanting to use his C-corp entity to invest passively into a multifamily syndication LLC. He is the only share holder and there will never be any external partners. Is this possible and if so, are there a lot of paperwork involved?

[Kim Lisa Taylor]

@Alina Trigub is right. There is no restriction from the Syndication side as to what kind of entity can invest in it, as long as it meets the qualifications for the offering. If the offering is only open to accredited investors under Regulation D, Rule 506(c), then per 17 Code of Federal Regulations Section 230.501(a)(8), all of the equity owners in the entity must be accredited investors. If the offering is open to accredited and unaccredited, but sophisticated investors under Regulation D, Rule 506(b), then he would not have to be accredited as long as he would qualify as a "sophisticated" investor, which is a subjective determination based on such things as past investing or work experience, or education. 

As others have pointed out, however, the real question is whether it makes sense from a tax perspective, which is a question best asked of a CPA.