22.1 LIMITED LIABILITY COMPANIES Flashcards
1
Q
WHAT IS THE TAX TREATMENT OF AN LLC?
A
LLCS ARE HYBRID ENTITES THAT HAVE CHARACTERESTICS OF BOTH PARTNERSHIPS AND CORPORATIONS. THEY ARE PASSTHROUGH ENTITIES FROM A TAX STANDPOINT WHILE THEY PROVIDE THEIR OWNERS, REFERRED TO AS MEMBERS WITH THE LIMITED LIABILITY PROTECTION OF A CORPORATION.
FYI* ONCE AN LLC REGISTERS ITS CLASSIFICATION, IT MUST WAIT 60 MONTHS (5 YEARS) TO MAKE A NEW ELECTION.
2
Q
WHAT ARE THE TWO SIGNIFICANT DOCUMENTS THAT ARE PREPARED WHEN FORMING AN LLC?
A
CERTIFICATE OF FORMATION - MANDATORY
OPERATING AGREEMENT - OPTIONAL
3
Q
HOW IS AN LLC MANAGED?
A
