Preserving federal benefits of single-member LLCs in light of state tax concerns.

Summary

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Limited liability companies

Single-member limited liability corporations (LLCs) are the main reason why states may not follow federal check-the-box entity classification regulations. States are concerned that their corporate tax base will be diminished if the federal classification scheme is respected. A possible alternative is to design a two-member LLC with a 99%-1% interest division between members which would result in state acceptance and federal classification.

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Extract

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Preserving federal benefits of single-member LLCs in light of state tax concerns.

Now that final check-the-box regulations have been out for almost a year, it is interesting to see how the states have reacted. California has already announced that it wil...

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