TAX NEWS - August 2009

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Limited Liability Companies Tax FAQ - State of Georgia tax

Q. How is an LLC classified in Georgia?

A. Each limited liability company and foreign limited liability company is classified as a partnership for Georgia income tax purposes unless classified otherwise for Federal income tax purposes, in which case the limited liability company or foreign limited liability company is classified for Georgia income tax purposes in the same manner as it is classified for Federal income tax purposes. Accordingly, Georgia follows the Federal "Check the Box" classifications.


Q. In 1999, Tennessee expanded the type of entities that are subject to the Franchise and Excise tax. In addition to s-corporations, it now includes limited liability companies, limited partnerships, etc. A Georgia resident, who is a shareholder in an s-corporation operating in a state that does not recognize the s-election, can make an adjustment for this income on schedule 1, line 9, of Form 500 if the tax is paid by the corporation. Does this adjustment also apply to a member of a limited liability company (treated as a partnership) or a partner of a limited partnership when the limited liability company or the limited partnership pays the Tennessee Franchise and Excise tax?

A. Effective for tax years beginning on or after January 1, 2006, an adjustment to income is allowed on Form 500 for a member of a limited liability company or a partner of a limited partnership when the limited liability company or the limited partnership pays the Tennessee Franchise and Excise tax.


Q. Does an LLC have to pay net worth tax?

A. An LLC is only subject to net worth tax if it is treated as a corporation for income tax purposes.
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