Business Entity Choice Flashcards
True or false: Single-member entities (limited liability companies) are ignored for federal income tax purposes unless election filed to be taxed as a corporation.
True.
Describe the similarities of a Partnership and S Corporation
Both are flow through entities with single taxation;
LLC members, limited partners, and S corporation shareholders have limited liability (but general partners do not);
Both have restrictions on the year-end that must be used for the entity.
Define “disregarded entity.”
Single-member limited liability company that is disregarded for federal tax purposes.
List the types of owners who have limited liability.
Shareholders;
Limited partners;
Limited liability company members.
True or false: A business incorporated under state law must file as a C-Corporation.
False.
Business incorporated under state law can file as either C or S corporation.
What classification options are there for partnerships and LLCs that have more than one owner?
Corporation (association); partnership.
True or false: Entities with more than one owner are, if not incorporated, taxed as a partnership unless they elect filing to be taxed as a corporation.
True. Such entities are taxed as parnerships unless they elect filing to be taxed as a corporation.
Which members of a limited liability have liability for the entity’s debt?
No member has liability for the entity’s debts
When must a “check the box election” be made?
If made within the first 75 days of the year is effective for tax year.
List examples of business entities that will be taxed as regular S corporation (known as per se corporations).
Examples include: Entities incorporated under state law; Insurance companies; State-chartered banks if deposits are insured by FDIC; Publicly-traded partnerships; Specified foreign entities.
