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ISSUE
Is M, a Utah limited liability company, classified for federal tax purposes as an association or as a partnership under section 7701 of the Internal Revenue Code?
FACTS
M is organized as a limited liability company (LLC) pursuant to the provisions of the Utah Limited Liability Company Act (Act), Utah Code Ann. secs48-2b-101 through 48-2b-157 (Supp. 1992). M is authorized under its articles of organization to engage in any and all business activity permitted by the laws of Utah. M has 25 members. Three of the members, A, B, and C, are the elected managers under M's articles of organization.
Section 48-2b-125(1) of the Act provides that the management of the LLC, unless otherwise provided in the articles of organization, is vested in its members in proportion to their interests in the profits of the LLC, as reflected in the operating agreement and as adjusted from time to time to properly reflect any additional contributions or withdrawals by the members. If the management of the LLC is vested in the members, any member has authority to bind the LLC, unless otherwise provided in the articles of organization.
Section 48-2b-125(2) of the Act provides that if the articles of organization provide for the management of the LLC by a manager or managers, the manager or managers shall be any person elected by the members in the manner prescribed by and provided for in the operating agreement. If the management of the LLC is vested in a manager or managers, any manager has authority to bind the LLC, unless otherwise provided in the articles of organization. A manager shall serve for a term specified in the operating agreement. This term may not exceed the duration of the LLC as specified in the articles of organization.
Section 48-2b-109 of the Act provides that, except as specifically set forth in the Act, neither the members, the managers, nor the employees of an of LLC are personally liable under a judgement, decree, or order of a court, or in any other manner, for a debt, obligation, or liability of the LLC.
Section 48-2b-111 of the Act provides that the Act does not alter any law applicable to the relationship between a person rendering professional services and a person...