About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

50 Ala. L. Rev. 813 (1998-1999)
The LLC Versus LLP Conundrum: Advice for Business Contemplating the Choice

handle is hein.journals/bamalr50 and id is 821 raw text is: THE LLC VERSUS LLP CONUNDRUM: ADviCE FOR
Fallany 0. Stover'
Susan Pace Hamill*
In recent years the number of unincorporated entities offer-
ing limited liability and partnership taxation has increased
substantially.1 Among the newer choices, limited liability com-
panies (LLCs) arrived on the scene first, with limited liability
partnerships (LLPs) appearing a few years later as a serious
challenge to the LLC's domain.2 Alabama offers businesses the
* B.S., University of Alabama, 1995; J.D., University of Alabama, 1998; and
associated with the law firm of Maynard, Cooper & Gale, P.C., Birmingham, Ala-
bama. This Article grew out of an independent study project Ms. Stover completed
for Professor Hamill during her third year of law school.
** Associate Professor of Law, The University of Alabama. Professor Hamill
thanks Dean Kenneth Randall and her faculty colleagues for all of their support and
gratefully acknowledges the University of Alabama Law School Foundation, the Ed-
ward Brett Randolph Fund and the William H. Sadler Fund. Professor Hamill spe-
cially recognizes the students in the Fall 1997 and 1998 classes on LLCs and LLPs,
especially James Coomes, Wade Hartley, Rick McBride, John Donsbach, and Charles
Gorham, whose valuable classroom participation contributed greatly toward the un-
derstanding of the issues in this Article.
1. Unincorporated business organizations in Alabama include sole proprietor-
ships, general partnerships, limited liability partnerships, limited partnerships, and
limited liability companies. Corporations that have properly elected subchapter S
status are taxed as pass-through entities but face many restrictions not applicable to
partnerships. The restrictions faced by S corporations cause many businesses to
choose one of the many unincorporated business forms taxed under the partnership
provisions. See Walter D. Schwidetzky, Is It Time to Give the S Corporation a Prop-
er Burial?, 15 VA. TAX REV. 591, 624 (1996). A comparison of the complex business
and tax differences between S corporations and unincorporated businesses taxed as
partnerships is beyond the scope of this Article. See also ALA. CODE § 10-8A-101(5)
(Supp. 1998) (defining a partnership under Alabama law); id. § 10-8A-1001 (listing
the requirements for registering as a registered limited liability partnership); id.
§ 10-9B-101(9) (defining limited partnership under Alabama law); id. §§ 10-12-1 to
-61 (1994) (establishing the Alabama limited liability company).
2. See infra notes 3-4 and accompanying text.


What Is HeinOnline?

HeinOnline is a subscription-based resource containing nearly 3,000 academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.

Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline with pricing starting as low as $29.95

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most