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

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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.

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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.
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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.

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