Limited Liability Company
The LLC is a relatively new business form in the United States, although it has existed in other countries for some time. In 1977, Wyoming became the first state to enact LLC legislation: it wanted to attract capital and created the statute specifically for a Texas oil company (W.S. 1977 § 17-15-101 et seq., Laws 1977, ch. 158 § 1). Florida followed with its own LLC statute in 1982 (West's F.S.A. § 608.401, Laws 1982, c. 82-177 § 2). At this point states had little incentive to form an LLC because it remained unclear whether the INTERNAL REVENUE SERVICE (IRS) would treat an LLC as a partnership or as a corporation for tax purposes.
In 1988, the IRS issued a ruling that an LLC in Wyoming would be treated as a partnership for tax purposes. This allowed the taxable profits and losses of an LLC to flow through to the LLC's individual owners; unlike a typical corporation, an LLC would not be taxed as a separate business organization. After the 1988 IRS ruling, nearly every state in the United States enacted an LLC statute, and the LLC now is a widely recognized business form. Many legal issues concerning the LLC are still developing, however.
In 1995, the COMMISSIONERS ON UNIFORM LAWS approved the Uniform Limited Liability Company Act. It was amended in 1996. Unlike other UNIFORM ACTS related to business entities, such as the Uniform Partnership Act, the uniform law governing LLCs has not been influential. As of 2003, only eight states and the U.S. Virgin Islands had adopted the uniform law; the remaining states have drafted their own laws.
Law Library - American Law and Legal InformationFree Legal Encyclopedia: Legislative Veto to Lloyd'sLimited Liability Company - History, Formation, Structure, Operating Agreement, Membership Interests, Member Contributions, Liability, Records And Books