Pass-Through Entity Taxation Attorneys in Naples, Florida

What Is a Pass-Through Entity?

A pass-through entity is a business structure where the profits and losses of the business are passed directly to the owners instead of being taxed at the corporate level. Unlike traditional C corporations that face double taxation (once at the corporate level and again at the shareholder level), pass-through entities allow income to be taxed only once.

The most common types of pass-through entities include:

• S Corporations (S Corps)
  
  
• Partnerships (General or Limited)
  
  
• Limited Liability Companies (LLCs)
  
  
• Sole Proprietorships
  
  

Each structure offers unique legal protections, tax benefits, and estate planning implications. Our attorneys help business owners select, form, and manage the entity type that best aligns with their operational goals, ownership structure, and long-term wealth strategies.

Benefits of Pass-Through Entity Taxation

Pass-through taxation offers several key advantages for small business owners, family enterprises, and closely held companies:

1. Avoidance of Double Taxation:
   Income is only taxed at the individual level, reducing the overall tax burden.
   
   
2. Flexible Profit Allocation:
   Owners can distribute profits and losses in proportion to ownership or as agreed upon in partnership or operating agreements.
   
   
3. Integration with Estate Planning:
   Pass-through entities are excellent tools for succession planning, gifting strategies, and wealth transfers, especially for family-owned businesses.
   
   
4. Tax Deductions:
   Business owners may qualify for certain deductions, including the Qualified Business Income (QBI) deduction under Section 199A, which allows eligible taxpayers to deduct up to 20% of qualified business income.
   
   
5. Operational Flexibility:
   Pass-through entities offer flexibility in management structure, ownership, and reporting — which can simplify long-term planning and administration.
   
   

At Jostock & Jostock, we ensure clients fully understand both the benefits and obligations of operating as a pass-through entity.

Navigating the Complexities of Pass-Through Taxation

While the benefits are significant, pass-through entities come with intricate tax rules that require careful legal and financial coordination.

Our firm advises clients on:



• Entity formation and tax election filings (such as Form 2553 for S Corps)
  
  
• Income allocation between partners, members, or shareholders
  
  
• Treatment of guaranteed payments and distributions
  
  
• Compliance with IRS reporting requirements
  
  
• Multi-state and federal taxation issues
  
  
• Integration of entity taxation with estate and trust planning
  
  

Because each entity type is subject to different rules, our attorneys take a personalized approach — analyzing ownership structures, business activities, and long-term objectives to create the most tax-efficient strategy.

Pass-Through Entities and Estate Planning

Pass-through entities play a crucial role in estate planning and wealth preservation. For many of our Naples clients, these entities are part of a larger strategy designed to protect assets, manage succession, and ensure smooth transitions of ownership.

1. Business Succession Planning

Through the use of LLCs, partnerships, or S corporations, business owners can transfer ownership interests gradually to heirs or beneficiaries while minimizing gift and estate tax exposure. This approach helps maintain control, protect assets from creditors, and provide liquidity when needed.

2. Gifting and Valuation Discounts

Our attorneys utilize legal mechanisms such as minority interest discounts and lack of marketability discounts to reduce the taxable value of ownership interests when transferring shares through trusts or gifts.

3. Trust Integration

Pass-through entities can be owned by trusts — allowing for more controlled distribution of income and wealth. We advise on structuring trusts that align with both the family’s goals and federal tax regulations.

By combining our deep knowledge of estate law and taxation, Jostock & Jostock delivers sophisticated strategies that protect both personal and business wealth for generations.

Common Challenges in Pass-Through Entity Taxation

Even with their advantages, pass-through entities are not without risks. Common challenges include:



• Improper income allocations that trigger IRS audits
  
  
• Misclassification of employees and contractors
  
  
• Failure to comply with basis and at-risk rules
  
  
• Errors in deducting business expenses or losses
  
  
• Incorrect reporting of distributions or capital contributions
  
  
• Failure to file annual reports or maintain corporate formalities
  
  

Our attorneys help identify potential vulnerabilities early and provide ongoing compliance support. We also represent clients during IRS examinations and disputes to ensure their interests are fully protected.

Pass-Through Entity Tax Litigation and Disputes

When disagreements arise with the IRS or state tax authorities, Jostock & Jostock provides experienced representation in tax litigation. We handle disputes involving:

• Misreported pass-through income or deductions
  
  
• Partnership audit adjustments under the Bipartisan Budget Act (BBA) rules
  
  
• Disputes over S corporation eligibility or election revocation
  
  
• Issues related to shareholder basis or capital accounts
  
  
• Controversies involving self-employment tax or payroll tax reclassification
  
  

We work to resolve disputes efficiently through negotiation or administrative appeals when possible. If litigation becomes necessary, our attorneys are skilled in navigating both federal and state tax courts.

Tailored Counsel for Naples Business Owners and Investors

Our approach to pass-through entity taxation is holistic — we don’t just focus on compliance, but on long-term planning and financial efficiency. We collaborate with accountants, financial advisors, and estate planners to develop strategies that balance operational flexibility with tax efficiency.

We advise:

• Small business owners and startups on entity formation and structure
  
  
• Real estate investors managing rental income or property portfolios
  
  
• Professional practices (medical, legal, consulting) seeking tax efficiency
  
  
• Family-owned businesses planning for generational transfers
  
  

With a deep understanding of both Florida business law and federal tax codes, Jostock & Jostock, P.A. offers comprehensive support designed to protect your assets, preserve your wealth, and ensure compliance at every level.

Why Choose Jostock & Jostock for Pass-Through Entity Taxation?

• Extensive Experience in Tax Law: Decades of experience advising closely held businesses and family enterprises.
  
  
• Integrated Estate and Tax Planning: Coordinated strategies that align business operations with long-term wealth goals.
  
  
• Proactive Risk Management: Preventive legal advice that minimizes IRS scrutiny and compliance risks.
  
  
• Local and Federal Insight: Deep understanding of Florida laws and federal tax frameworks.
  
  
• Personalized Client Service: Every client receives customized guidance designed around their unique needs.