I'm considering setting up an LLC or S corporation for my new business; it will be a one-owner business. I understand that a one-member LLC is treated as a sole proprietorship by the IRS, and thus, there is no tax basis treatment applied to a one-member LLC with profits unless I take the IRS Form 2253 election for S corp treatment. I'm stuck on the tax-basis treatment of profits and resulting tax treatment. It seems if I invest $10,000, my tax basis is $10,000. If I earn $20,000 first year, only $10,000 is reportable as taxable income--if the Form 2253 election is taken. Thereafter, my basis would be zero until new capital is invested. Do I have this concept correct? Thank you!