When a Multiple-Member LLC becomes a Single-Member LLC, it is no longer taxed as a partnership but rather as a disregarded foreign US entity (a sole proprietorship). Therefore, your LLC will be treated differently in terms of tax by the IRS. The opposite is also true, when a Single-Member LLC becomes a Multi-member LLC, it is no longer taxed as a disregarded foreign US entity (a sole proprietorship) but rather as a partnership.
That's why it is highly advisable to notify the IRS by filing Form 8832 to change the elect treatment of your LLC or you can also wait until the annual tax filing to report it. Please find the instructions on the IRS website. If you need tax assistance, we offer tax consultations and a list of legal partners through our Firstbase.io Network.
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