Hello,

The situation I currently face is this: I wish to transfer a pre-tax sum (i.e., service compensation) from Company A (not owned by me) to Company B (owned by me), operating in a manner akin to writing a check. Currently, Company B is a limited liability company (LLC). My question is: If I deposit the funds into Company B's business account and elect to be taxed as a C corporation, and never make profit distributions, would I only need to pay the new 21% corporate tax, without reporting personal income?

The key difficulty lies in how I can spend these funds from the company without it being deemed personal income. I am not in urgent need of cash, but it would be more ideal if I could avoid an additional personal income tax of about 10% while achieving expenditure at the corporate level.

Thank you for reading!

—The above is the original content; the following is an editorial analysis (based on facts, without altering the original meaning):

This question involves the difference between the C corp tax rate (21%) after the U.S. tax reform and the individual tax rate (up to 37%). However, it should be noted that if a C corp's profits are not distributed, the company level indeed only pays the 21% corporate tax; yet, if shareholders receive any economic benefit from the company (such as personal consumption, loans, compensation, etc.), it may be deemed a 'constructive dividend' or 'shareholder loan,' thereby triggering personal income tax. Additionally, transferring funds from Company A to Company B, if Company A is a related party or there is a service contract, must ensure commercial substance; otherwise, there may be risks of tax audit.

It is recommended to consult a professional tax advisor to clarify the compliant path.