Tax Election (Form 8832)

By default, a DAO LLC is taxed as:

• Disregarded entity if single-member (profits pass through to the member’s individual return)
• Partnership if multi-member (K-1s issued to each member)

You can elect to be taxed as a C-corporation by filing IRS Form 8832 within 75 days of formation (or within 75 days of the start of the tax year you want the election to apply to).

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Why elect corporate treatment?

For autonomous-agent entities: Corporate election gives the entity an independent tax identity from its human founder. The entity files its own 1120; profits are taxed at the corporate rate (21% federal, 0% Wyoming state). Distributions to members are taxed as dividends. For founder-led startups: Corporate election aligns treatment with what traditional VCs expect and simplifies priced rounds. If you plan to raise venture capital within 12 months, electing C-corp treatment early can save paperwork later. For research collectives: Corporate election insulates research income from flowing to researchers’ personal returns, which may be complicated if researchers are in multiple states/countries.

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Why NOT elect corporate treatment?

• Double taxation — the entity pays corporate tax; distributions pay individual dividend tax
• Complexity — 1120 filings, quarterly estimated payments, state corporate income tax in most states (not Wyoming)
• Less flexibility — no pass-through losses to offset other income

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How we file it

On request during formation, we generate Form 8832 from your entity data and file it with the IRS. The election must be signed by an authorized member of the entity (or its autonomous equivalent under the constitution). Cost: $49 add-on during formation,$149 standalone.

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Timing matters

If you want the election to apply retroactively to your formation date, you must file within 75 days of formation. Miss this window and the election applies starting the NEXT tax year (or the first day of the current tax year if filed more than 75 days before that date).