Taxation of limited liability companies

The IRS adopted the check-the-box regulations (CTBR), which allow every state-created limited liability company (LLC) to choose to be taxed as a partnership for federal tax purposes. Since 1997, all but 2 or 3 states have adopted specific legislation, or revenue regulations, regarding the LLC that mirror the CTBRs. Additionally, classification of the entity itself is irrelevant, such as where there is no state income tax. A few states require payment of an entity tax by the LLC irrespective of partnership or corporation status. A smaller minority of states require the LLC to meet special obligations, including the withholding of income tax on a nonresident's distributive share of income. A table indicates whether a state follows the federal classification of an LLC for state tax purposes.