The limited liability company: An idea whose time has come

The limited liability company (LLC) is a hybrid business entity that combines the operational flexibility (and certain tax advantages) of a general partnership with the liability protection usually afforded owners only in the corporate form or in a limited partnership. The LLC is a creation of state...

Full description

Saved in:
Bibliographic Details
Published in:Strategic finance (Montvale, N.J.) N.J.), 1994-12, Vol.76 (6), p.30
Main Authors: McNair, Frances, Milam, Edward E
Format: Magazinearticle
Language:English
Subjects:
Accounting firms
Agreements
Classification
Corporate taxes
Definitions
Flexibility
Limited liability companies
Limited liability partnerships
Limited partnerships
Personal service corporations
Requirements
Revenue procedures & rulings
State court decisions
Tax courts
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The limited liability company (LLC) is a hybrid business entity that combines the operational flexibility (and certain tax advantages) of a general partnership with the liability protection usually afforded owners only in the corporate form or in a limited partnership. The LLC is a creation of state law and must be organized in accordance with the laws of the specific state. In the revenue rulings that have been issued to date, the IRS has relied on Section 7701(a)(2), definition of a partnership, or Section 7701(a)(3), definition of a corporation, and the related regulations for its tax analysis. Section 301.7701-2(a)(1) of the regulations sets forth 6 major characteristics that an organization must possess to be classified as a corporation: 1. associates, 2. objective to carry on a business and divide gain, 3. continuity of life, 4. centralized management, 5. liability for corporate debts limited to corporate property, and 6. free transferability of interest. Professional service LLCs and limited liability partnerships are also discussed.
ISSN:1524-833X