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54 Ohio St. L.J. 175 (1993)
The Best of Both Worlds: The Limited Liability Company

handle is hein.journals/ohslj54 and id is 201 raw text is: The Best of Both Worlds:
The Limited Liability Company
In the past few years, state legislatures have shown a renewed interest
in what is perhaps the most innovative form of business association, the
limited liability company (LLC). The LLC combines the limited liability
feature of the corporate form of association with the tax advantages of a
partnership. The earliest states to enact LLC statutes were Wyoming in
1977 and Florida in 1982.1
No other states took an immediate interest in this form of business
association, primarily due to the uncertainty surrounding the Internal
Revenue Service's (IRS) treatment of the LLC. The LLC was designed to
provide flow-through tax advantages as in a partnership, but it was not
officially known if the IRS would indeed honor such status. Recently,
however, this difficulty was resolved and Colorado, Kansas, Virginia,
Utah, Nevada and Texas have passed LLC Acts.2 An ABA survey has
reported that, in at least seven other states, including Arizona, California,
Illinois, Maryland, Michigan, New Hampshire, and Oklahoma, LLC
legislation has been introduced, and significant interest exists in another 25
Given the advantages of the LLC form of business association it is not
surprising that it is gaining popularity. The limited liability feature allows
I ABA Group Finds States Moving In Limited Liability Companies, 23 SEC. REG.
& LAW REP. 1275, 1275 (1991) [hereinafter ABA Group].
2 Id. The LLC form of business association is not limited to the United States.
Other countries include Bermuda, see General Ad. Inv. Ltd. v. Business Dev. Capital
Ltd. Partnership, 620 F. Supp. 964 (S.D.N.Y. 1985); France, see Elizabeth Taylor
Cosmetics Co. v. Annick Goutal, 673 F. Supp. 1238 (S.D.N.Y. 1987); Italy, see
Gucci v. Gucci Shops, Inc., 688 F. Supp. 916 (S.D.N.Y. 1988); Lebanon, see Abu-
Nassar v. Elders Futures, 1991 WL 45062 (S.D.N.Y.); Mexico, see MacGuire v.
Commissioner, 450 F.2d 1239 (Sth Cit. 1971); Netherlands, see Hanson Trust PLC v.
ML SCM Acquisition Inc., 781 F.2d 264 (2d Cir. 1986); Nigeria, see Hester Int'l
Corp. v. Federal Republic of Nigeria, 879 F.2d 170 (5th Cir. 1989); Saudi Arabia,
see Arabian Trading & Chem. Indus. Co. v. B.F. Goodrich Co., 823 F.2d 60 (4th
Cir. 1987); Switzerland, see Cohn v. Rosenfeld, 733 F.2d 625 (9th Cir.), cert. denied,
469 U.S. 932 (1984); West Germany, see Bernstein v. N.V. Nederlandsche-
Amerikaansche Stoomvaart-Maatschappij, 173 F.2d 71 (2d Cir. 1949).
3 ABA Group, supra note 1, at 1275; see also International Taxes, Field Support
Unit, Litigation Process Examined by IRS Official, DAILY REP. FOR ExEcuTIvEs,
January 22, 1992, at 3.

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