Question

If you are not familiar with Taxes and Accounting please pass on this one:

A LLC (limited liability company) is the fasted growing entity form used by both small and large businesses. S corporations continue to have the greatest number of tax filings every year.

SOURCES:

Treasury Regulation §301.7701-3 Entity Classification, including (b)(1), (c)(1), (c)(1)(v)(C)

Revenue Procedure 2002-69

BOTH MAY BE FOUND WITH A GOOGLE SEARCH (e.g., Treasury Regulation 301.7701-3)

REQUIRED – USE THE CITATIONS ABOVE TO ANSWER THESE QUESTIONS, AND INDICIATE WHAT AUTHORITY SUPPORTS THE ANSWER

2. How does the tax law classify an LLC with one owner?

Answer 1

Section 301.7701-2(a) defines the term “business entity” as any entity recognized for federal tax purposes (including an entity with a single owner that may be disregarded as an entity separate from its owner under § 301.7701-3) that is not properly classified as a trust under § 301.7701-4 or otherwise subject to special treatment under the Code. (https://www.irs.gov/pub/irs-drop/rp-02-69.pdf)

An LLC with only one member is classified as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation. If LLC is not elecgted to treat as corporation than its activity would be reflected in owners income tax return (https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies)