Three Members Form an LLC in the Current Year

question 37

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 have its default classification ignored.
• C)The LLC can elect to be taxed as a C corporation with no special tax consequences.
• D)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.

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Definitions:

Wine Production

The process of cultivating grapes and converting them into wine through fermentation, aging, and bottling, involving both agricultural and industrial activities.

Downstream Cost

Expenses incurred after the primary production phase, including distribution, marketing, and customer service costs, that are part of bringing a product to market.

Floor Tiles

Hard-wearing, durable pieces of material such as ceramic, stone, metal, or even glass, used for covering floors in a variety of settings.

Firm's Assets

Economic resources owned by a firm that are expected to provide future benefits, including physical items like machinery and intangible items like patents.