Tennessee: Department Issue Notice on Treatment of Single-Member LLCs

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By KPMG's Washington National Tax practice | Nov. 25, 2013


From TaxWatch

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Recently, the Tennessee Department of Revenue issued a notice addressing the franchise/excise tax treatment of single-member limited liability companies (SMLLCs). Under Tennessee law, a SMLLC will be disregarded if its single member is a corporation. The notice is intended to provide clarification on whether a SMLLC whose sole member is not a corporation under state law, but that is treated as a corporation under federal law, is disregarded for franchise/excise tax purposes. The notice states that Tennessee will consider an entity to be a corporation if it is formed as a corporation or elects to be treated as corporation for federal tax purposes. Therefore, a SMLLC will not be disregarded if its single member is not formed as a corporation or classified as a corporation for federal tax purposes. Such a SMLLC with a non-corporate single member will be treated as separate entity for franchise/excise tax purposes and must file a separate franchise/excise tax return. Please contact Blair Norman at 615-248-5544 with questions on Notice 2013-6.

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