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Level 2
posted May 6, 2022 2:42:16 PM

Annual Report - sufficient to change default LLC classification?

This is regarding LLC formed in Oregon with multiple members listed.

 

Is updating the annual report with the state to one member sufficient to change the default tax classification?

 

Thank you!

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3 Replies
Level 15
May 6, 2022 2:48:39 PM

If you have a multi member LLC it is taxed as a partnership by default.   If you get rid of all the partners except one you now have a single member LLC  so the partnership is effectively closed and a final partnership return must be filed.   Then the single member LLC will be reported on a Sch C or an 1120/1120S if you incorporate.   Seek local professional assistance if you do not  know the state laws involved (since the LLC  designation is a state issue not a federal one).  

Level 15
May 6, 2022 5:33:59 PM

there can also be federal tax issues related to section 751 reporting, maybe section 179 and 168(k) depreciation recapture. i agree with @Critter-3 get professional guidance.

 

 

Level 15
May 6, 2022 5:38:59 PM

there can also be federal tax issues related to section 751 reporting, maybe section 179 and 168(k) depreciation recapture.