Tax Implications of the Limited Liability Company
- Topics:
- Taxes
- Tags:
- Entity,
- Finance,
- Financial Planning,
- Free Trade,
- Income,
- Internal Revenue Service,
- LegalWiz.com,
- Operational Accounting,
- Taxes
- Source:
- LegalWiz.com
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Overview: "The limited liability company has created some confusion and uncertainty for entrepreneurs considering their choice of entity for doing business. Initially, most legal and tax practitioners were concerned about how the LLC would be treated by the IRS for tax purposes. In the past, the Internal Revenue Service used a four-part test to determine if an entity should be treated as a corporation for income tax purposes. Remember, the U.S. Constitution makes Federal law (income taxation) supreme to state law (definition of entity). The 4 part test was: Is there centralized management? Does the entity have perpetual life? Is there free transferability of ownership? Is there limited liability? If more than two of the four factors existed, the IRS could re-classify an entity as a corporation for tax purposes. "
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Format: HTML | Date: Jan 1998 | Pages: 1
