LLC are pass-through entities. So, let's say you're a farmer, and you set up Farm, LLC, and then set up Profit, LLC. Profit LLC has to charge Farm LLC enough to

LLC are pass-through entities. So, let's say you're a farmer, and you set up Farm, LLC, and then set up Profit, LLC. Profit LLC has to charge Farm LLC enough to eliminate the profits that Farm LLC generates. One way to do this is to have Profit LLC own the land, and Farm LLC pays Profit LLC a lease rate on the land that nicely eliminates the profit from Farm LLC. This is all well and good, but now you've just shifted the profit to Profit LLC, and what to do with it there? If it's an LLC, whoever owns it has to pay income tax on it. So if you, the farmer, own Profit LLC, you're still paying taxes on it. If Farm LLC owns it, then the profit just goes back to Farm LLC, undoing the whole purpose. So maybe you decide to make Profit LLC a C-Corp instead, so it's Profit, Inc., with the idea that now it's no longer a pass-through entity. But now you have to pay corporate income tax on it, even if you don't distribute it. Then, when you distribute it someday, you have to pay regular income tax on it again. Some companies (such as Toys 'R Us) used to get around this by having "Profit LLC" be a company that owns the brand and licenses it to the retail company, to eliminate the retail company's profits. They then locate Profit LLC in a low/no-tax country such as the Cayman Islands. It's not clear how this would work for a farmer, however, because there's not really a brand to license, and any company that owned the land would still fall under US tax jurisdiction.