2 Business Organizations with Tax Planning § 33.07


Summary

  • [1] In General

    An LLC may be treated as either a partnership (if the LLC has more than one member) or a sole proprietorship (if the LLC has only one member) for federal income tax purposes, thereby avoiding corporate two-tier taxation. However, an LLC’s status for federal tax purposes does not necessarily determine how it will be taxed at the state level.

    The avoidance of the two-tier system of federal income taxation applicable to corporations1Link to the text of the note is one of the main reasons for selecting the LLC as a form of business organization.2Link to the text of the note An LLC is ordinarily taxed as a partnership,3Link to the text of the note