Question

Is the limited liability company automatically taxed as a corporation?

A) True
B) False
C) Depends on the country
D) Unspecified

Answer 1

A limited liability company (LLC) is not automatically taxed as a corporation; the tax treatment depends on how the owners choose to be taxed. The correct answer is B) False.

Step-by-step explanation:

The correct answer is B) False. A limited liability company (LLC) is not automatically taxed as a corporation. Instead, the tax treatment of an LLC depends on how the owners choose to be taxed.

By default, an LLC with only one member is treated as a sole proprietorship for tax purposes, while an LLC with multiple members is treated as a partnership. However, the owners of an LLC can elect to be treated as a corporation for tax purposes if they so choose.

For example, if an LLC with two members wants the LLC to be taxed as a corporation, they can file Form 8832 with the IRS to make that election. The correct answer is B) False.