Key Takeaways
- State law: formation and liability. Federal law: taxation.
- Check-the-Box (1997): eligible entities elect classification via Form 8832.
- Default: 1 owner = disregarded; 2+ owners = partnership.
- Per Se Corporations: cannot elect (UK PLC, French SA, German AG).
- Domestic Inc./Corp = corporation for tax (can elect S-status, not partnership).
- Kintner Regulations replaced by Check-the-Box.
Last updated: January 2026
State Law vs. Tax Classification
Why This Matters for the Exam
An LLC formed under state law has no inherent federal tax status. Know the defaults and per se corporations.
Expect at least 2-3 questions on classification.
The Distinction
| Governs | Authority |
|---|---|
| Formation and liability | State law |
| Taxation | Federal law (IRS) |
Check-the-Box (Treas. Reg. 301.7701-3)
| Effective | 1997 | | Form | 8832 (Entity Classification Election) | | Purpose | Override default classification |
Default Classifications
| Owners | Default Classification |
|---|---|
| 1 owner | Disregarded entity |
| 2+ owners | Partnership |
Per Se Corporations (Cannot Elect)
| Domestic | Foreign |
|---|---|
| Inc., Corp (state charter) | UK PLC |
| French SA | |
| German AG | |
| Mexican SA |
Form 8832 Use
| Action | Form |
|---|---|
| LLC → Corporation | Form 8832 |
| LLC → Disregarded | Form 8832 |
| C-Corp → S-Corp | Form 2553 (not 8832) |
Real-World Scenario
Scenario: Question about UK PLC changing classification.
- Per Se: UK PLC is per se corporation.
- Result: Cannot check the box—always taxed as corporation.
On the Exam
Expect 2-3 questions on classification, typically:
- Default Questions: "2-member LLC, no election—classification?"
- Per Se Questions: "Can UK PLC elect partnership?"
- Form Questions: "Which form for classification election?"
The key is to remember: 1 owner = disregarded. 2+ = partnership. Form 8832 to elect. Per se corps (PLC, SA, AG) cannot elect.
Test Your Knowledge
UK PLC—can it elect partnership status?
A
B
C
D
Test Your Knowledge
2-member LLC, no election. Default classification?
A
B
C
D
Test Your Knowledge
Which form to elect corporate status for LLC?
A
B
C
D