Legislation authorizing the limited liability company (or LLC)has been adopted in all but a few states despite the fact that, until recently, the Internal Revenue Service had provided relatively little guidance on LLCs and the concept had not been the subject of a uniform or model act. The IRS attention had been focused heavily on whether, under the various state statutes, LLCs were likely to be treated as partnerships for federal income tax purposes.

In recent weeks, the Internal Revenue Service has provided substantially more guidance on the taxation of LLCs in the form of proposed regulations and a revenue procedure. These two developments, coupled with the resolution in most of the states with corporate limitations on farmland ownership and farm operation of the question of whether LLCs must comply with those limitations, should encourage greater use of the LLC.