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Old 01-28-2009, 01:26 PM
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Join Date: Jan 2009
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Accounting after LLC taxed as C-corp election

We just changed our LLC to be taxed as a C-corp using form 8832 for the tax year 2009 and I have a few questions:

1. Since we did not distribute all the money in the bank account to members in 2008, and in 2009 the LLC is taxed as a C-corp what do we do with the 2008 money now? Can we do one of the following:
(a) Write checks to members now, in 2009, and just tell the 2009 accountant that those transactions were for 2008 distributions when the company was an pass-thru LLC?

(b) Reclassify all the 2008 remaining money as a liability, like "Loan From Members" or something, and then clear it out when we get around to making payments - which are in fact delayed 2008 member distributions?


2. I guess the bigger question is - when an LLC changes to C-corp taxation, do all the libiabilities have be zeroed out? credit card bills, etc. If they are not paid out, then are booked as "accrued expenses" on 1/1/2009?

Thanks in advance for your help



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