Anne and Bill plan to form a limited liability company to engage in the business of...

Anne and Bill plan to form a limited liability company to engage in the business of developing and marketing computer software. Only Anne and Bill will have authority to act on behalf of the LLC. Because of the limited powers that the investor-members will be granted, Anne and Bill think it best that the investors be permitted to sell or assign their membership interests if they so desire. Of course, Anne and Bill want the business of the LLC to be uninterrupted by the death, bankruptcy, etc., of an investor-member.

Question: Will the LLC be taxed as a corporation if organized in the manner contemplated by Anne and Bill?

Expert Solution

Facts : Anne and Bill plan to form a limited liability company to engage in the business of developing and marketing computer software. Only Anne and Bill will have authority to act on behalf of the LLC. Because of the limited powers that the investor-members will be granted, Anne and Bill think it best that the investors be permitted to sell or assign their membership interests if they so desire. Of course, Anne and Bill want the business of the LLC to be uninterrupted by the death, bankruptcy, etc., of an investor-member.

Conclusion: As per the provisions of the limited liability companies Anne & Bill's LLC will be taxed as a corporation if it is organized in the manner contemplated by them(Anne & Bill) because members and business entity will be considered as a separate legal entity for the purpose of taxation.

Here separate legal entity means the company and its members have their own legal entity means they(company & Anne and Bill) will be considered as individuals.They are different from each others.

ekkarill92 answered 3 months ago

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