LLC Flashcards
1
Q
LLCs:
What is an LLC?
A
The Limited Liability Company is a business form that blends some corporate form advantages into a flow-through entity
2
Q
LLCs:
What is the tax advantage of an LLC?
A
Answer: No double taxation.
Allows qualifying business to be treated as a proprietorship or partnership for tax purposes, thereby avoiding double taxation associated with regular
corporations.
3
Q
LLCs:
What is required for an entity to be considered a corporation for Federal Income Tax purposes?
A
After frequent litigation, it was determined that an entity would be treated as a corporation for Federal income tax purposes if it had a majority of the characteristics common to corporations. • Continuity of life. • Centralized management. • Limited liability. • Free transferability of interests.
4
Q
LLCs:
How can an LLC be taxed at the Federal level?
A
LLCs (single or multi-member) can choose to be taxed as a C corporation or can elect S corporation status.