I’m looking to purchase 50% of my dad’s painting business as a foreign investor to apply for an E-2 investor visa. Currently, the business is structured as an S Corp, which is beneficial for him tax-wise because he pays himself a lower salary and takes the rest as distribution profit.
As a foreign investor, this would require the company to change its status to a C Corp. My question is: if the visa is denied, is it possible to switch the business back to an S Corp so my dad doesn’t face higher taxes unnecessarily?
Posted by Prior-Golf5464
4 Comments
check with a tax advisor. rules are complex and change often. could be possible.
The rules for making an S election may prohibit this. If your dad is a US citizen or if he is a permanent resident and you are not married, why not have him petition for you?
Definitely talk to a specialist. Depending on the size of the business it may be advantageous to structure in a layered approach to keep the S Corp but allow foreign investors via another entity that owns interest in the S Corp or vice versa.
If an entity revokes its S status, it must wait 5 years before it can elect to go back to S status.