Classification

The Entity Classification rules classify certain business entities as Corporations:

• A business entity formed under a Federal or State statute or under a statute of a federally recognized Indian tribe if the statute describes or refers to the entity as incorporated or as a corporation, body corporate or body politic.
• An Association under Regulations section 301.7701-3.
• A business entity formed under a Federal or State statute if the statute describes or refers to the entity as a joint stock association.
• A state chartered business entity conducting banking activities if any of its deposits are insured by the FDIC.
• A business entity wholly owned by a state or political subdivision thereof, or a business entity wholly owned by a foreign government or other entity described in Regulations section 1.892.2-T.
• A business entity taxable as a corporation under a provision of the code other than section 7701(a)(3).
• Certain foreign entities (see Form 8832 instructions).
• Insurance Company

Generally, LLCs are not automatically included in this list, and are therefore not required to be treated as corporations. LLCs can file Form 8832 (PDF) to elect their business entity classification.

Pursuant to the entity classification rules, a domestic entity that has more than one member will default to a partnership. Thus, an LLC with multiple owners can either accept its default classification as a partnership, or file Form 8832 to elect to be classified as an association taxable as a corporation.

The Form 8832 is also filed to change the LLC’s entity classification. Thus, an LLC that has been treated as a partnership for several years may be able to prospectively change its classification to be treated as a corporation by filing Form 8832.