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59 Ohio St. L.J. 1459 (1998)
The Origins behind the Limited Liability Company

handle is hein.journals/ohslj59 and id is 1475 raw text is: OHIO STATE LAW JOURNAL
Volume 59, Number 5,1998
The Origins Behind the Limited Liability Company
ThisArticle documents the story behind and the complex origins ofthe Limited
Liability Company (LLC). Using unpublished letters, memoranda, and other
documents, this Article shows the inside story of the interest group activity
responsible for inventing the first LLC statute in 1977, the initial battle fought by
the early LLC proponents to secure partnership classfication from the Internal
Revenue Service, and the organized efforts of LLC proponents in the 1990s
lobbying the IRS for more favorable partnership classification rules, while
encouraging the states to enact statutes. Professor Hamill offers a unique
perspective on the story of the LLC through her experience as an attorney with the
Chief Counsel's Office of the Internal Revenue Service (from 1990-1994) during
many of the events described in the Article.
This Article also offers insights into the origins of the LLC by analyzing how
certain business and tax dynamics came together, resulting in the LLC entering into
the American landscape Focusing on the historical evolution of corporations, this
Article traces the LLC's earliest origins to the first few decades of the nineteenth
century when state law power over the incorporation process cemented. Focusing
on the twentieth century, this Article identifies first the modern income tax of 1913
as the LLC's modern origin, and then explores how the effective income tax burden
of doing business in the corporate versus partnership forms and how the
development of the market for investments in independent oil and gas drilling
ventures greatly affected the timing of the LLC's invention in the 1970s. An
explanation of the LLC's rise to prominence in the 1990s concludes this Article.
* Associate Professor of Law, The University of Alabama School of Law. The author
gratefully acknowledges the financial support of the University of Alabama Law School
Foundation, the Edward Brett Randolph Fund, and the William H. Sadler Fund. The author thanks
her faculty colleagues, Dean Ken Randall, Wythe Holt, Tony Freyer, Bill Brewbaker, and David
Epstein for their valuable comments and appreciates the ideas from John Dzienkowski (You need
to completely document the LLC's story and figure out how the story connects with the history
of corporations.). The author especially appreciates Tim Coggins, the members of the
Cumberland Law School Legal History Forum, and Herbert Hovenkamp for comments on an
earlier drafL Special thanks goes to Howard Wathall whose friendship and patience over two long
summers as I explored these topics were especially meaningful. Finally, the hard work and tireless
efforts of the research assistant team, Carol Longshore, James Coomes, Wade Hartley, Mike
Perrett, Rick McBride, Charles Gorham, John Donsbach, and Pete Bond, made this Article

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