Question

Explain the similarities and differences, if any, with regard to the tax treatment of LLCs and LLPs.

Answer 1

There is a similarity and differences in taxation of the limited liability partnership and limited liability companies. these are as follows-

A. Limited liability partnership is taxed like general partnership.there are shares of partners which are predefined in nature and those partners will be paying the taxes at their individual tax rates

Limited liability company is also taxed like a partnership and the taxation of the whole company is shifted to the individuals owning that company so it can be said that there is a similarity of taxation between both the form of business

B. There is a difference in the form of business in terms of taxation because Limited liability partnership cannot be selecting the corporate rate of taxation whereas limited liability company have the option of going for a corporate rate of taxation and avoiding the individual rate of taxation.