Answers · Partnerships · Form 1065
Two-Member LLC Taxed as a Partnership
A partnership generally exists for federal tax when two or more persons carry on a joint business and no different tax classification applies; a domestic two-member LLC is generally a partnership by default.
This question is answered in full on the main page for it.
How it works
The rule, and what it turns on.
State-law entity form and federal tax classification are separate.
Example
Two unrelated 50/50 Texas LLC members with no corporate election generally file Form 1065.
Common mistakes
What we see go wrong, and what we do instead.
- Assuming LLC means one specific federal tax status.
A better approach
- Confirm classification elections before filing.
Authority
Where this comes from, so you can check it.
IRC §§701-777; Form 1065 and instructions; IRS Publication 541.
Relevant case law
Commissioner v. Culbertson, 337 U.S. 733 (1949) - partnership validity turns on whether parties in good faith and
acting with a business purpose intended to join together in the conduct of the enterprise.
Commissioner v. Tower, 327 U.S. 280 (1946) - tax consequences follow the substance of a bona fide partnership, not
merely labels.
Educational information, not individualized tax advice. Treatment depends on your facts, entity classification and tax year, and IRS instructions change. Confirm your own position with us before relying on it. Mint Associates does not provide legal services.
Have this question about your own books?
Thirty minutes with someone who does this every day, and you will know where you stand. No obligation.