How did Louisiana treat a corporate owner's single-member LLC that had not elected federal corporate tax status?

Plain-English summary

A single-member LLC that had not elected federal corporate treatment was a disregarded entity and division of its corporate owner for Louisiana income-tax purposes.

The LLC's assets, liabilities, income, deductions, and credits were reported on the corporation's federal return and followed that treatment for Louisiana tax.

Nexus rule

The corporate owner computed Louisiana income tax like any other corporation. If either the corporation or its disregarded LLC had Louisiana nexus, the corporation had Louisiana nexus.

Limiting assumption

The ruling's historical note expressly assumed the single-member LLC had not elected to be treated as a corporation for federal income-tax purposes.

Common questions

Q: Did the LLC file as a separate corporation under the stated facts?

A: No. It was disregarded as a division of its corporate owner.

Q: Where were the LLC's tax items reported?

A: On the single corporate member's return.

Q: Did LLC nexus affect the owner?

A: Yes. Nexus of either entity created Louisiana nexus for the corporation.

Q: Did the ruling address an LLC that elected corporate treatment?

A: No. Its historical note excluded that situation.

Citations and references

• La. R.S. 12:1368 — Louisiana treatment follows federal income-tax treatment
• Treas. Reg. § 301.7701-2(a) — division of the owner
• Treas. Reg. § 301.7701-3(b)(1)(ii) — single-member disregarded entity
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 03-006

Original ruling text

Historical Note: For purposes of this Revenue Ruling, the assumption is made that the single
member limited liability company has not elected to be treated as a corporation for federal
income tax purposes.

Revenue Ruling
No. 03-006
December 8, 2003
Corporation Income Tax
Corporation Income Tax Treatment of Single Member LLCs

This Revenue Ruling addresses the corporate income tax treatment of single member limited liability
companies (LLCs).
Under the provisions of La. Rev. Stat. Ann. § 12:1368, the LLC is treated and taxed for state income
tax purposes in the same manner that it is treated and taxed for federal income tax purposes. Under
Internal Revenue Service Regulations § 301.7701-3(b)(1)(ii), a single member LLC is considered to
be a “disregarded entity.” It is considered a division of its corporate owner under § 301.7701-2(a).
All of its assets, liabilities, income, deductions, and credits are reported on the federal income tax
return of its single member, the corporation. Therefore for state income tax purposes, the LLC is
taxable as a “disregarded entity” and a division of the corporation.
The corporation will compute its Louisiana income tax liability in the same manner as any other
corporation. If either the corporation or the LLC has nexus with Louisiana, then there is nexus for the
corporation.
Cynthia Bridges
Secretary
By:

Bettye Winham
Revenue Tax Research Analyst
Policy Services Division

Revision History: December 8, 2003 (new document); June 14, 2004 (historical note added)

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue
employees. It is issued under Section 61:III.101(C) of the Louisiana Administrative Code to apply
principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of
law and is not binding on the public. It is a statement of the department's position and is binding on
the department until superseded or modified by a subsequent change in statute, regulation,
declaratory ruling, or court decision.