Document Type


Publication Date

January 1997


This Article suggests that, while the "check the box" regulations will eliminate the need to comply with the complex corporate resemblance test in order to achieve partnership tax status for LLCs, a number of regulatory considerations will continue to be important in choosing the optimal management structure for this form of business. This Article focuses on securities laws, rules relating to available accounting options, and self-employment tax regulations as three examples of rules that will influence the way the management structure of LLCs should be set up in order to minimize potential regulatory costs. In addition, it is possible that the passive loss rules might be amended so as to exert and significant influence on the optimal management structure for LLCs. While not exhaustive, this list of considerations illustrates the complexity of regulations relevant to the management structure of LLCs, in addition to the business needs and preferences of participants, and demonstrates that we are still a long way form offering business planners and participants true freedom of choice with regard to management structures for LLCs.