S-Corp and it's owner are different entities?

[Richard Z.]

I need a business structure to reduce the SE tax and S-Corp income tax.

Can I invest capital in a development LLC as PASSIVE partner together with all other passive partners, then have my LLC S-corp as manager - I'm the manager of the LLC S-Corp. Will I still be considered as passive partner in this case?

The management fee will flow through to the S-Corp. In the S-Corp, I pay myself salary, SE and some dividend. All my passive income in development LLC will be avoiding SE tax and S-corp income tax(1.5% in CA). I don't want my S-Corp to hold the units as the 1.5% income tax on net income of S-Corp.

Does this make sense, any comments/suggestions?

[Steven Hamilton II]

Richard Z.,

That is one of my areas of expertise.

Your business would be paid as a manager. You personally would be a shareholder of the developement and yes, you would not be an active member.

That does make some sense. Your S-corp does not pay dividends. You pay tax on all profit.

The passive LLC will be paying that state tax on its earnings as well. I see how you don't want to pay double tax on that and the structure will make that work.

My real question for you is what is your AGI? You may be better off with a C-corp depending upon your income.

-Steven