Question

If you are not familiar with Taxes and Accounting please pass on this one:

A LLC (limited liability company) is the fasted growing entity form used by both small and large businesses. S corporations continue to have the greatest number of tax filings every year.

SOURCES:

Treasury Regulation §301.7701-3 Entity Classification, including (b)(1), (c)(1), (c)(1)(v)(C)

Revenue Procedure 2002-69

BOTH MAY BE FOUND WITH A GOOGLE SEARCH (e.g., Treasury Regulation 301.7701-3)

REQUIRED – USE THE CITATIONS ABOVE TO ANSWER THESE QUESTIONS, AND INDICIATE WHAT AUTHORITY SUPPORTS THE ANSWER

How does the tax law classify a LLC with two or more owners?

Answer 1

Classification of multiple member LLC is treated as partnership for tax purposes if the entity does not elect to file either of the two forms to be classified as C or S corporation.

Entity should file Firm 8832 to get treated as C Corporation and Form 2553 to be treated as S Corporation.

If the Business is to be treated as S or C Corporation relevant tax filing rules should be complied and the owners are treated as employees of the Corporation and employment tax rules should be complied with.