An S corporation is a pass-through entity and does not pay federal income tax.

The net earnings of the S corporation are passed through to the shareholders of the company and reported on their individual income tax returns.

Because trusts are not subject to double taxation, either principal or income on which the trust paid taxes can be distributed tax-free to the beneficiaries.

Likewise, any taxable distribution to beneficiaries is deductible by the trust.

These cash distributions are taxable events and shareholders should consult their tax advisors about potential tax consequences.

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While other states have been relatively slow to adopt series LLC statutes, several have done so in the last several years. Under the laws of these states, the assets of a series are separate and cannot be used to satisfy the debts of another series.

Allows an LLC operating agreement to establish “one or more designated series of assets that …If the trust retains income beyond the end of the calendar year, then it must pay taxes on it.If money is distributed to the beneficiaries, then whether it is taxable or not to the beneficiaries will depend on whether principal or income was distributed, and if it was income, then whether it was tax-free income or retained income from previous years that the trust has already paid tax on.has separate rights, powers, or duties with respect to specified property or obligations of the limited liability company.” Allows an LLC operating agreement to “establish or provide for the establishment of 1 or more designated series of members, managers, limited liability company interests or assets.Any such series may have separate rights, powers or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and any such series may have a separate business purpose or investment objective.” Allows an LLC operating agreement to “establish one or more designated series of members, managers, or interests of a limited liability company, in which the members, managers, or interest holders have separate rights, powers, or duties with respect to specified property or obligations of the limited liability company.” Allows an operating agreement to “establish or provide for the establishment of designated series of members, managers or limited liability company interests having separate rights, powers or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and to the extent provided in the operating agreement, any such series may have a separate business purpose or investment objective.” Allows an operating agreement to “establish or provide for the establishment of a designated series of transferable interests having separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and, to the extent provided in the operating agreement, any such series may have a separate business purpose or investment objective.” Allows an operating agreement to “establish or provide for the establishment of one or more designated series of members, managers or limited liability company interests having separate rights, powers or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and to the extent provided in the operating agreement, any such series may have a separate business purpose or investment objective.” Allows an operating agreement to “establish or provide for the establishment of a designated series of members, managers, or limited liability company interests having separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations.The S corporation must “match” and pay over to the IRS an amount equal to the FICA portion of the tax withholding.