Answer the following statements true (T) or false (F)
1. Under the "check-the-box" Treasury Regulations, an LLC with more than one member is treated as a partnership unless the LLC affirmatively elects to be classified as a corporation.
2. An LLC that elects to be taxed like a partnership is also classified as a partnership for legal purposes.
3. The income of a single member LLC is taxed to its owner under the sole proprietorship rules if no election to be taxed as a corporation is made.
4. The transfer of property to a partnership in exchange for a partnership interest will generally be a nontaxable event.
1. TRUE
The check-the box-regulations provide default treatment to partnership status for an LLC with more than one member.
2. FALSE
An LLC is not legally a partnership even if it is taxed as one.
3. TRUE
The check-the box-regulations provide default treatment to disregarded status for an LLC with only one member. If that single member is an individual, the entity is treated as a sole proprietorship.
4. TRUE
IRC Sec. 721 generally provides nonrecognition treatment for the exchange of property for a partnership interest.
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