Limited Liability Companies (Portfolio 725)
At a glance
I. Introduction: Choice of Entity Considerations
II. Converting to LLC Status
III. Partnership Classification
IV. Application of Partnership Rules to LLCs
V. Application of Other Technical Rules to LLCs
VI. Tax Treatment of Self-Employment Earnings, Fringe Benefits and Other LLC Compensation Issues
VII. Foreign LLCs
VIII. State Tax Issues
Abstract
Tax Management Portfolio, Limited Liability Companies, No. 725, focuses on the federal tax consequences of using a limited liability company (LLC) for conducting business operations. It is not a primer on the fundamentals of partnership taxation.
The tax factors in choosing an LLC are compared to regular corporations, S corporations, and partnerships as alternative business forms for tax purposes; and various uses of the LLC are summarized.
The tax consequences of converting partnerships and corporations to LLC status are discussed. Classification of the LLC is examined in detail and the unique federal tax consequences of using the LLC are discussed. Analysis and commentary are provided to the tax practitioner to assist in resolving the tax issues encountered when using an LLC.
Compensation issues are analyzed for the potential impact on LLC members. International use of the LLC is explored in detail and the state tax consequences are summarized to assist the tax practitioner in generalizing these consequences when using the LLC interstate.