Business Law 3320 - Limited Liability Companies and Special Business Forms

These flashcards cover key concepts and tax considerations related to limited liability companies and special business forms as discussed in the Business Law 3320 lecture.

Asset protection and tax considerations.

What should a business person consider when choosing a business entity?

General partners have unlimited personal liability.

What is the personal liability status of general partners in a general partnership?

Members have no personal liability for LLC debts.

How are LLC members protected regarding personal liability?

C Corporations are taxed on income, and shareholders are taxed on distributions.

What is the taxation structure of a C Corporation?

Income flows through to shareholders who are taxed on their individual income tax returns.

What is the tax implication for shareholders of an S Corporation?

Shareholders must make an IRS election to be treated as an S Corporation.

What must an entity do to be treated as an S Corporation?

Partnership income is taxed to partners, even if it stays within the entity.

How are partnerships taxed?

It is used to elect how the entity and members of an LLC will be taxed.

What is the role of Form 8832 in relation to LLCs?

A sole proprietor is taxed directly on income on the individual income tax return.

What is the taxation status of a sole proprietor?

Members can decide how the LLC and its members will be taxed by completing IRS Form 8832.

What determines how an LLC can be taxed?