Question by Tony Stella:
I read on one of your pages that an LLC owned by a husband and wife could still be considered a single member LLC and therefore would not be recognized as a separate entity for tax purposes. Can you tell me what legal authority or precedent there is for that, since I haven't been able to find any information in any of the IRS publications or regulations that I have seen. And does it depend upon state law, i.e. does that state have to specifically allow for single member husband and wife LLC?
Answer By William Bronchick:
A husband and wife doing business can file as a partnership (IRS form 1065), if they have an express agreement to share profits and losses in a business venture. Absent such an agreement, they file jointly on their IRS form 1040, Schedule C, or in the case of rental real estate, schedule E. Likewise, an LLC can file as a partnership if it has two or more members, or as a "disregarded" entity if there is only one member. In this case, the husband & wife are considered "one person."
In 1997, I obtained a private letter ruling from my District IRS Office confirming this analysis. When I come across it, I will post a copy on my web site.
Disclaimer: The foregoing is not intended to be given as legal, financial or tax advice, but intended for instructional use only. If you require legal, financial or tax advice you should seek the assistance of a qualified professional.
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