In the first part of our series concerning entity selection for owning real estate, we addressed sole proprietorships and tenants in common. In part two, we addressed the business and tax law considerations of partnerships. In this installment, we consider the business and tax law aspects of corporations.
C-Corporations
Corporations are one of the oldest forms of legal entities. A significant body of case law and statutes exist defining the rights and liabilities of shareholders, officers, directors, and third parties dealing with the corporate entity. Certain states, like Delaware, have particularly favorable business corporation statues. As a result, many firms will strategically organize in those states in order to obtain the benefit of those advantageous laws.
Unlike a general partnership that can come into existence without filing anything affirmative, a corporation has a separate legal existence. The corporate structure serves to insulate most of the debts from the shareholders. A corporation is able to hold property in its own name and provide its shareholders with limited liability so long as the...
