Three Members Form an LLC in the Current Year

question 32

Multiple Choice

Three members form an LLC in the current year. Which of the following statements is incorrect?

• A) The LLC's default classification under the check- the- box rules is as a partnership.
• B) The LLC can elect to be taxed as a C corporation with no special tax consequences.
• C) If the LLC elects to use its default classification, it can elect to change its status to being taxed as a C corporation beginning with the third tax year after the initial classification.
• D) The LLC can elect to have its default classification ignored.

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Definitions:

Compounded Monthly

A method of calculating interest where the accumulated interest is added to the principal at the end of each month, leading to an increase in the amount of future interest.

Compounded Quarterly

The method of calculating interest by adding the interest to the principal amount on a quarterly basis, which then earns additional interest in the subsequent quarters.

Monthly Deposits

Regular amounts of money deposited into an account or investment at monthly intervals.

Monthly Deposits

Regular payments or investments made into a particular account or scheme every month.