I owned a rental property under a S-Corp in California. To save money on my tax returns,

First, check with the State of California about their 'franchise fees' for corps and LLCs.. I don't practice in Ca but I understand the State of Ca. charges high fees that may not make it worthwhile. Then you can bring the facts and figures to a good tax pro and determine the best way to go. Forming a corp or LLC is not always better if you just have one rental property with modest income.

To convert from a Sub S Corp to an LLC necessitates a liquidation of the Sub S Corp which may result in taxable gain. I agree with the other attorney's suggestion that you employ a local tax attorney who may be able to assist you with the ppssible problem I mentioned and who can also advise you with respect to Cal's franchise taxes. This is for informational purposes only and should not be relied upon by anyone as legal advice.

You really need to speak with a tax attorney, because whether you would save on taxes (or owe much, much more) depends on what the business owns, how it was structured, and a number of other details not present in your question. One issue which would concern me is whether the assets in your S-corp are subject to the built in gains (BIG) tax upon conversion to a different type of entity. If the S-corp was, at any time, a C-corp and the C-corp passed assets to the S-corp, liquidating the S-corp in to another entity would trigger a capital gains tax. This is one of the big downsides to S-corps in general, you have to be very careful of any past items which could have been under C-corp status. As others have suggested here, you'll also want to consider franchise fees, self employment, and other detailed tax matters before undergoing any type of conversion. A tax attorney can help you with this, and you will find a number of qualified people here on .