Here’s teh introduction to their latest update..
This CannaBlog is intended to provide some considerations that current and potential license holders should think about as they work with advisors to make entity selection decisions or consider potential tax elections. Please note that this article is a high-level overview and is not intended to declare the best type of entity structure for a license holding entity. Although numerous tax variables should be contemplated, tax issues are not the only concerns relevant to determining entity type. Also, some states may tax entities differently than how the entity is taxed for federal purposes.
First, let’s look at the legal entity types that may be set-up to hold a license, operate a business, and what that may mean for how an entity is taxed. Often, entities are set-up as either limited liability companies or corporations.
If a limited liability company is organized and the entity is owned by only one owner, a single member LLC, the default tax treatment would be that the entity is disregarded for tax purposes. In other words, it would not file a separate federal income tax return. All the tax consequences of the activities within the legal entity are reported on the tax return of the entity’s owner.
If a limited liability company is set-up, and the entity is owned by more than one owner, a multiple member LLC, the default tax treatment would be that the entity is taxed as a partnership. An entity taxed as a partnership reflects the tax consequences of the activities within the legal entity on a partnership return. The partnership generally does not pay tax on the activity, but rather the taxable income and loss are passed through to the LLC owners. The LLC owners reflect the taxable income or loss on his/her/its tax return and are responsible for paying any resulting tax. Either a single-member LLC or a multiple-member LLC may elect to treat the LLC as a C-corporation or an S-corporation for tax purposes.
The Taxation of C-corporations and S-corporations
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