In a recent decision, the court rejected the suggestion that the
election by a particular LLC, for purposes of the Federal Internal
Revenue Code, to be classified as a corporation should impact upon
the mechanism by which the citizenship of the LLC is assessed for
diversity purposes. In effect, the LLC argued that, having elected
to be taxed as a corporation, it should be assessed for diversity
purposes as a corporation. This argument was unsuccessful.
Fairfield Castings, LLC v Hofmeister, No. 4:15-cv-00059, 2015 WL
4105027 (S.D. Iowa July 2, 2015).
In rejecting the invitation to treat the LLC as a corporation
for purposes of diversity jurisdiction, the District Court
wrote:
Similarly, Spara's elective decision to be treated as a
corporation for tax purposes does not somehow transform its LLC
status for purposes of evaluating diversity jurisdiction. The
motivations behind a business entity's choice to be taxed in a
certain manner have no bearing on the rationale
