I agree that it’s technically possible to have a C-Corporation act as a parent or holding company; however, depending on the organizational structure of your future divisions or subsidiaries, this might well subject your profits to double or even triple taxation.
C-Corps are separate tax entities and thus, their profits are subject to corporate income taxes.
Let’s assume that your holding company Generic Enterprises Inc. owns all or a controlling ownership interest in XY Divisions, LLC. Since LLCs are not recognized as separate tax entities, XY Division LLC’s profits will flow through to Generic Enterprises Inc. and become part of their taxable income/net profit, which is subject to corporate income tax.
If you or the shareholders of Generic Enterprises Inc. are to receive regular dividend payments, these cash distributions are then again considered to be capital gains from investment activities and thus subject to individual income tax.
It can even get worse if XY Division is structured as another C-Corp., which would essentially entail that their profits are taxed twice before increasing any cash reserves in Generic Enterprises Inc. that are eligible for dividend payments/cash distributions to shareholders.
You might be well advised to discuss your business model with a qualified CPA or financial advisor before making any decision as this can have a widespread impact on tax liabilities and thus the profitability of your venture.
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