LLC tax classification, elections, and reporting (REG)

The rules, one page each

1. LLC Default Tax Classification: Single-Member vs. Multi-MemberContrasting cases

   Absent an effective federal election, a domestic eligible LLC with one owner is disregarded for income tax; with two or more owners, it is a partnership. An effective corporate election overrides these defaults.

2. LLC Adds a Member Midyear: Default Tax ClassificationTimeline

   Without a corporate or S election in effect, a domestic eligible LLC is disregarded with one owner and a partnership with two or more. Adding a second owner changes classification on the admission date.

3. Form 8832 election timing: effective dates, retroactivity, and split-year resultsTimeline

   A valid Form 8832 election may be effective no more than 75 days before the filing date and no more than 12 months after, and cannot be effective before the entity’s formation date; classification follows default rules before the effective date and the elected status on and after it.

4. Form 8832 persists and the 60‑month rule: elections trump member countDecision tree

   A valid entity-classification election remains in effect until changed. An entity that changed its classification with an election generally may not change again for 60 months, except that an election effective on the entity’s formation date is not subject to the 60‑month limit.

5. LLCs electing S corporation status: Form 2553 vs Form 8832Contrasting cases

   A timely, valid Form 2553 by an otherwise eligible domestic LLC both elects corporate classification and S status; filing Form 8832 without Form 2553 elects C corporation status.

6. Who files what, and how much is taxed? Disregarded vs partnership reporting and amountsWorked example

   Disregarded LLCs generally file no separate federal income tax return; the owner reports all items. Partnerships file Form 1065 and allocate taxable income to partners based on the agreement or ownership for the period; cash distributions usually do not affect current taxable income.