While it’s not always the best alternative, sometimes converting a C corporation to LLC status may make sense. In certain situations, a conversion can provide the C corp shareholders with limited liability along with the advantages of pass-through taxation.
Before making such a move, practitioners should weigh the long-term benefits against the initial cost. There may be a high tax cost to convert a C corporation with significantly appreciated assets, so practitioners probably will only want to consider conversion in certain circumstances
Find out what situations would make a corporate conversion desirable.