What Happens When there are Multiple Entities?

In many cases, the use of multiple entities provides an optimum solution. Legal liability can be reduced by separating asset owning entities from operational entities. Multiple entities allows for the mixing of the strength of differing entity types. For example, while an S corporation may provide the ability to bifurcate earned income for FICA tax purposes, it is not the best choice to hold real estate due to restrictive debt basis and distribution rules.