DESCRIPTION
This module provides an overview of LLC formation and ownership changes, beginning with a brief introduction to the federal check-the-box rules and the general use of Form 8832. It then examines the tax treatment of single-member LLCs admitting additional owners under Rev. Proc. 99-5 and multi-member LLCs converting to single-member LLCs under Rev. Proc. 99-6. Participants analyze the deemed transactions that occur under each revenue procedure and their related tax consequences. The concepts are reinforced through computational exercises and true/false evaluations involving partial interest sales and ownership changes.
LEARNING OBJECTIVES
- Describe the general federal tax treatment resulting from an LLC classification election under the check-the-box rules.
- Distinguish between the two transactional structures under Rev. Proc. 99-5 when a single-member LLC admits one or more additional member.
- Assess whether statements regarding partial interest sales and LLC ownership changes are true or false based on applicable tax rules and guidance.
- Analyze the impact of a multi-member LLC becoming a single-member LLC under Rev. Rul. 99-6.
- Compute the federal income tax results of LLC formation and conversion transactions under Rev. Proc. 99-5 and Rev. Proc. 99-6 using fact-based exercises.
