With the LLC, there is no loss of control with respect to income, as all of the income can usually be applied to the parent, if that is desired, in payment of his management services. The ability to control a business has a value, or a premium, over a noncontrolling interest. Conversely, a noncontrolling interest is not worth as much as a controlling interest. In other words, its value is discounted. Take, as an example, a business, or portfolio of real estate or securities, with a total value of two million dollars.
Some cost is involved here.
However, if a business is to be operated, the LLC is an excellent all around choice in the first place. Thus, this technique may add little or no new cost in formation of the organization. Also, the cost of forming, and operating, an LLC is less than that of a corporation. The value of the business interests must be formally appraised, which adds some expense. This is essential to steer clear of IRS problems because of the discounting that is taken into account.