The Story of Llcs: Combining the Best Features of a Flawed Business Tax Structure

Abstract

This chapter briefly recaps the conventional legal story of the limited liability company and then provides a detailed discussion of the inside story behind and the complex origins of this new business entity, which traveled from obscurity to the mainstream of business organization choices during the last quarter of the twentieth century. The inside story of the LLC involved the creative efforts of two different groups of LLC proponents harnessing the power of state legislatures over new business organizations in order to provide their clients the best results under the federal income tax laws. Hamill also offers an in depth discussion of the tax and business policy issues brought to the surface because of the invention and widespread acceptance of LLCs, ultimately concluding that LLCs represent neither a positive nor a negative development in the flawed legal landscape of business organizations.

This paper will be published as a chapter in a book entitled Business Tax Stories, to be published by Foundation Press later this year (2005).