A limited liability company:
A) Could be subject to double taxation.
B) Is normally taxed as a partnership.
C) Is normally taxed as an S corporation.
D) Only a. and b.
E) a., b., and c.

Question

Quizplus · Accepted Answer

A limited liability company (LLC) can choose how it wants to be taxed, either as a partnership, a corporation, or a disregarded entity (in the case of a single-member LLC). By default, an LLC is taxed as a partnership, which means that it is not subject to federal income tax at the entity level; instead, profits and losses pass through to the owners' personal tax returns. However, an LLC that elects to be taxed as a corporation could be subject to double taxation, as both the entity and its owners would be taxed on the same income. Therefore, statements A and C are incorrect, and the correct answer is D: Only a. and b.

A Limited Liability Company