LLC taxed as an S Corp has to follow S Corp rules . For income tax purposes it is an S Corp.

thanks - that's what I thought but their previous CPA filed to have the LLC taxed as an s-Corp with 4 of the 7 members as non residents. 

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@cherylgolich wrote:

thanks - that's what I thought but their previous CPA filed to have the LLC taxed as an s-Corp with 4 of the 7 members as non residents. 

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Which pretty much voids the S-election, so it is now taxed as a C-corporation.

I think there is a provision to keep the S-election if immediate action is taken to correct the situation, but seeing as how 4/7ths of the members are affected, that doesn't seem like it will work for your clients.

They can live outside the US, but they cannot be Nonresident Aliens. They must be US citizens or Resident Aliens.

"nonresidents" doesn't tell us which you mean.