In a limited liability company, all members may participate in management (the operating agreement cannot limit participation), and all entity debts are treated as nonrecourse liabilities for purposes of allocating the LLC's liabilities to basis.

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In a limited liability company (LLC), the operating agreement can indeed limit members' participation in management, and not all entity debts are treated as nonrecourse liabilities for purposes of allocating the LLC's liabilities to basis; recourse and nonrecourse liabilities are allocated according to the LLC's operating agreement and tax regulations.

In a Limited Liability Company, All Members May Participate in Management