The Single Member Limited Liability Company as Disregarded Entity: Now You See it, Now You Don’t

9 Pages Posted: 2 Mar 2010 Last revised: 5 May 2010

See all articles by Daniel S. Kleinberger

Daniel S. Kleinberger

William Mitchell College of Law

Carter G. Bishop

Suffolk University Law School

Date Written: February 25, 2010


The power and complexity of the single member limited liability company (“SMLLC”) comes from a conceptual contradiction: the conflation of owner and organization for tax purposes and the separation of owner and entity for non-tax, state law purposes. The contraction has significant practical consequences, which this article explores and illustrates, considering:

• The SMLLC in federal court (single member not permitted to represent the LLC) • The IRS’s tortuous path to determining whether an SMLLC’s sole member is liable for the SMLLC’s unpaid employment taxes (yes; yes vindicated by the courts; then no, as a matter of policy) • Transfer taxes on a single member’s contribution of land to the member’s solely-owned LLC (maybe taxable, maybe not) • Whether the membership transfer restrictions built into LLC statutes in order to prevent the separate creditors of an LLC member from intruding into the business of a multi-member LLC ought to be applied to allow a sole member to shelter assets from the claims of the sole member’s legitimate creditors (under advisement by one state supreme court for more than a year)

The article concludes that “practitioners must exercise great caution when working with an SMLLC, because, depending on which legal regime applies, the SMLLC may be as visible and substantial as a stone wall, or as diaphanous and subject to disappearance as the Cheshire Cat.”

Keywords: limited liability company, LLC, single member limited liability company, SMLLC, transparency, pass through taxation, Lattanzio, Hagerman, pro se representation, transfer taxes, transfer restrictions, conflation, entity aggregate

Suggested Citation

Kleinberger, Daniel S. and Bishop, Carter G., The Single Member Limited Liability Company as Disregarded Entity: Now You See it, Now You Don’t (February 25, 2010). Business Law Today, Forthcoming, William Mitchell Legal Studies Research Paper No. 2010-04, Suffolk University Law School Research Paper No. 10-12, Available at SSRN: or

Daniel S. Kleinberger (Contact Author)

William Mitchell College of Law ( email )

875 Summit Ave
St. Paul, MN 55105-3076
United States

Carter G. Bishop

Suffolk University Law School ( email )

120 Tremont Street
Boston, MA 02108-4977
United States
617-573-8534 (Phone)

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