Business entity registration

Disregarded entity

If a multi-member LLC converts to a single member (disregarded) entity weeks after incorporation with no activity what so ever – does this generate any tax or reporting obligations for the time as a partnership or will it carry with the same responsibilities as if it was always a disregarded entity?

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  1. 8 Answers

    As a conservative rule of thumb, it is typically advisable to notify the IRS, your particular state’s taxing authority and also your particular state’s Secretary of State office whenever converting a multi-member LLC to a single member LLC even if that single member LLC will be a disregarded entity. Also, even though this entity, in both legal forms, had no activity for the period in question, it is advisable to notify the proper governmental agencies. Some states may require an update of the Articles of Organization to properly reflect the change, along with an update of the formal operating agreement.

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