Tax Drill - Overview of LLCS Indicate whether the following statements are "True" or "False" regarding tax issues related to limited liability companies ( a. A partnership that reorganizes as an LLC is treated as having liquidated prior to forming the new entity. The transaction Is taxable to both the partnership and the partners. b. Because none of the LLC members are personally liable for any debts of the entity, the LLC is effectively treated as a limited partnership with no general partners. All owners of an LLC have the legal right to participate in the entity's management. C. d. State statutes differ from state to state as to the type of business an LLC can conduct -particularly as to the extent to which certain service-providing firms can operate as LLCS.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Tax Drill - Overview of LLCS
Indicate whether the following statements are "True" or "False" regarding tax issues related to limited liability companies (LLCS).
a. A partnership that reorganizes as an LLC is treated as having liquidated prior to
forming the new entity. The transaction Is taxable to both the partnership and the
partners.
b. Because none of the LLC members are personally liable for any debts of the entity, the
LLC is effectively treated as a limited partnership with no general partners.
All owners of an LLC have the legal right to participate in the entity's management.
C.
d.
State statutes differ from state to state as to the type of business an LLC can conduct
-particularly as to the extent to which certain service-providing firms can operate as
LLCS.
Transcribed Image Text:Tax Drill - Overview of LLCS Indicate whether the following statements are "True" or "False" regarding tax issues related to limited liability companies (LLCS). a. A partnership that reorganizes as an LLC is treated as having liquidated prior to forming the new entity. The transaction Is taxable to both the partnership and the partners. b. Because none of the LLC members are personally liable for any debts of the entity, the LLC is effectively treated as a limited partnership with no general partners. All owners of an LLC have the legal right to participate in the entity's management. C. d. State statutes differ from state to state as to the type of business an LLC can conduct -particularly as to the extent to which certain service-providing firms can operate as LLCS.
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