Three examples:
- John Jones, sole member of Jones LLC. The LLC has the option, under IRS rules, to be treated as a corporation, in which case it must obtain its own EIN and file its own annual tax return; or be treated as a disregarded entity, in which case the LLC can use John Jones' SSN as its TIN, and does not have to file its own annual tax return (John Jones reports its income and expenses as if it were a sole proprietorship).
- ABC Corporation, sole member of ABC LLC. The LLC has the option, under IRS rules, to be treated as a separate corporation, in which case it must obtain its own EIN and file its own annual tax return; or be treated as a disregarded entity, in which case the LLC can use ABC Corporation's EIN as its TIN, and does not have to file its own annual tax return (ABC Corporation files its return that includes the income and expenses of ABC LLC as if it were a division rather than a separate entity).
- Jones LLC (see above) is a sole member of Jones II LLC. Jones II LLC may be treated as a corporation under IRS rules and obtain its own EIN, and file its own return; or it may use the TIN of Jones LLC, which may be an EIN assigned to Jones LLC or the SSN of John Jones.
In each scenario, the LLC is a separate
legal entity regardless of whether it has opted to be a disregarded entity for IRS purposes.
When structuring loans to LLCs or any other complex arrangement, it's a good idea to have an attorney involved.