s corporation and separate llc combining loss and profit

my client's objective is to pay less tax. my client sole owner is an s corporation in one business, a single member in another business operated as an llc. the s corporation has significant 200k in suspended losses, the llc on the other hand has profits and will continue to make profit. the s corp losses are suspended, cannot be used due to basis limitations, and profits are not expected to be generated in a speedy way over years to come. the llc is making money, lots of it. the issue is the single member pays tax.

can I combine operations? have the s corp go through the licensing process to register the dba as the name related to the llc, change the bank account to the s corp, account for operations in the s corp, bill the client through the s corp and then offset positive income with suspended losses?

or can the llc be a partner in the s corp and have the income passed through to the s corp and offset on the client's individual return with suspended losses?

I appreciate your input.

LLC cannot be an s Corp owner. Would lose S status.

The S-Corp can be the sole member of the LLC. No need to change bank accounts, etc. All of the LLC activity would simply be reported on the S-Corp tax return.

the llc has its own bank account, own tax identification number, invoicing, equipment etc. it is recently formed over the last month. by making an s corporation the sole member of the llc, the llc still continues to operate and collect its revenues and pay expenses through the llc books and bank account, however all activity is combined and reported in the s corporation? this solves the suspended loss issue? does not invalidate the s corp status? not seen as a problem?

thanks,

Yes to all.

I appreciate the answer. now, for just a few documenting procedures to ensure I get this right?

The LLC is licensed in Washington state, the single member is a contractor and has licensed himself as a general contractor, the LLC has it's own bank account, Tax id, is single member, has not been in business for two months.

The s corporation, owned by the same person, has business, it's own TIN, bank account, filed tax returns for years.

To make the s corporation the sole member of the llc, is there an a business amendment that needs to be done? Or just make sure that the operating agreement states the s corpooration is the single member?

Since the tax consequence is significant enough, I don't want to do something improper. For the better example, the LLC will have employees and report those employees under it's TIN, file form 941, state agency reports etc, but then will report its income, costs and expenses under the S corporation, have a distinct TIN, and file it own reports with state employment agencies?

I want to know what I will need to change if anything, and how the employment reporting concerning payroll will play out when I file the S corporation return.

Thanks very much.

While this is legal, and I am not a lawyer,

The individual contributes his LLC interest to the S Corporation. This should be documented. Bonus points for having the OA show the S Corp as sole member.

that's a good point. i will reflect the membership interest or equity in the llc as an asset of the s corporation. i will make sure that the operating agreement reflects the s corp as the sole member. I can't see anything that would be changed or applicable with the state secretary of state's office.