Identify which of the following statements is true.
A)Under the check-the-box rules, an LLC with more than one member is taxed as a corporation unless it elects to be taxed as a partnership.
B)The partnership's tax year closes with respect to a partner whose interest is transferred by gift.
C)An LLC has been taxed as a partnership for five years. Under the check-the-box rules, the LLC makes a timely election in 2019 to be taxed as a C corporation. The election of C corporation status is permitted and results in the LLC's assets being transferred from a partnership to a C corporation under the federal income tax rules.
D)All of the above are false.

Question

Quizplus · Accepted Answer

Under the check-the-box regulations, an LLC can choose to be taxed as a partnership or a corporation. If an LLC elects to change its tax classification, such as from a partnership to a C corporation, it is treated for federal income tax purposes as if the assets of the partnership are sold to the corporation in exchange for stock of the corporation, thus making statement C true.

Identify Which of the Following Statements Is True