Limited Liability Company (LLC)

An LLC is an entity formed under state law by filing articles of organization as an LLC.

An LLC with two or more members is classified as a partnership for federal income tax purposes unless it elects to be taxed as a corporation or was formed before 1997 and was taxed as a corporation. An LLC with one member is not treated as a separate entity for income tax purposes unless it elects to be taxed as a corporation.

If an LLC is not treated as a separate entity, its member reports the LLC income and expenses on Schedule C or C-EZ (Form 1040) or Schedule F (Form 1040) as if the LLC were a sole proprietorship. If the LLC is classified as a partnership, it files Form 1065. If the LLC is classified as a corporation, it files Form 1120. If the LLC is classified as a corporation and makes the election to be taxed as an S corporation, it files Form 1120S.

If an LLC is treated as a partnership, see Publication 541 for information on partnerships. If it is treated as a corporation, see Publication 542 for information on corporations.

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