A limited liability company:
A) can only have a single owner.
B) is comprised of limited partners only.
C) is taxed similar to a partnership.
D) is taxed similar to a C corporation.
E) generates totally tax-free income.

Question

Quizplus · Accepted Answer

A limited liability company (LLC) is taxed similar to a partnership in that profits and losses flow through to the owners' personal tax returns. An LLC may have multiple owners, so option A is incorrect. Option B specifies that an LLC is comprised of limited partners only, which is not accurate since an LLC can have both limited and general partners. Option D is incorrect because a C corporation is taxed separately from its owners. Lastly, option E is false because all income generated by an LLC is subject to taxation.

A Limited Liability Company