Banks may become limited liability companies under FDIC proposal

Northwestern Financial Review, Aug 1-Aug 14, 2002

The Federal Deposit Insurance Corp. has proposed a regulation allowing state chartered banks to organize as limited liability companies. Limited Liability Corporations were first created in the mid-1980s and are now considered one of the fastest growing forms of corporate identity The tax benefit of an LLC is similar to that of a subchapter S corporation in that the double taxation of earnings is avoided.

Unlike an S corporation, however, an LLC has no restriction on the size and class of its owners and may have more than one class of ownership interest. The Internal Revenue Service would have to modify its pertinent rules for the tax benefit to take effect. The proposal will be open to at 90-day comment period.