Can an LLC have a member that is also an LLC?
Yes. An LLC can generally have another LLC as a member; it does not have to be a C corporation or S corporation. State LLC statutes commonly define “person” broadly enough to include other LLCs, corporations, trusts, and similar entities, and the IRS likewise recognizes that LLC owners may include other LLCs. N.Y. Ltd. Liab. Co. Law § 102 [3] Corp. Code § 17701.02 [4] [[source: 1]] [1]
Short answer
An LLC member can be a natural person or another entity, including another LLC.
That is true as a general rule in the sources provided. Delaware defines “person” for LLC purposes to include a wide range of entities, including a “limited liability company.” Del. Code Ann. tit. 6, § 18-101(14) [2] New York and California similarly define “person” broadly to include LLCs and other business entities. N.Y. Ltd. Liab. Co. Law § 102(w) [3] Cal. Corp. Code § 17701.02(v) [4]
Federal tax classification is a separate issue
Whether an LLC can be a member is different from how the LLC is taxed. The IRS states that owners of an LLC may include individuals, corporations, other LLCs, and foreign entities. [[source: 1]] It also explains that a domestic LLC with multiple members is generally taxed as a partnership unless it elects corporate treatment, and a single-member LLC is generally disregarded for income tax purposes unless it elects corporate treatment. [[source: 2]]
| Issue | General rule |
|---|---|
| Who can be a member of an LLC | Another LLC can be a member |
| Must a member be a C corp or S corp | No |
| Tax classification of the LLC | Separate question; depends on IRS default rules and elections |
Important caveat
A few special industries, such as banks and insurance companies, may have restrictions on whether they can be organized as LLCs at all. [[source: 1]] But that is a separate question from whether an LLC may own an interest in another LLC.
Bottom line
An LLC may usually have another LLC as a member. It does not have to be a C corporation or S corporation. If you want, I can also explain the tax consequences of having an LLC as the member of another LLC.