I own two companies, one is a small IT firm that also holds nearly all the assets used in my businesses. My second company, the CPA firm, is a spin-off of the other company for legal reasons (business partnership gone bad, and I wanted to 100% break any agency the public may have perceived my former partner as having). Both are LLCs with Sub-S elections.
I need to actually reach someone at LLR to ask if this is even allowed in my state (it is--the question is does SC LLR allow a CPA firm to have a subsidiary, let alone in a different industry), but does anyone see any critical tax issues if I had the CPA firm acquire 100% of the IT firm and made a Q-Sub election? The revenue split still puts the CPA firm making 95% of the money, so I am fine on that front with LLR. The way the IT firm is structured and managed, it is certainly sideline and intentionally barely turns a profit...I am also not concerned about not getting a stepped up basis in the assets.