By default, an LLC is taxed as a pass-through entity (sometimes called a 'disregarded-entity'), and the LLC's profits pass through to the members' personal income for tax purposes.
This is different from a regular C corporation, which pays a corporate tax on its net income (the first tax). Then, when the corporation distributes profits, the stockholders pay income tax on dividends (the second tax).
An LLC is special in that its owners can choose how it is taxed.
Tax Options For an LLC
An LLC can decide if it wants to be taxed as a C corporation or to pass its income through to the members as an S corporation, a partnership or as a disregarded entity. If it elected to be taxed as a corporation then it would file either Form 1120 (C corporation taxation) or Form 1120-S (S corporation taxation).
If it chooses to be a partnership, it will file Form 1065. If there is just one member, he or she would report the income on his or her personal return (usually Schedule C if earned income or Schedule E if rental income) and would be a disregarded entity for tax purposes.
An LLC Owned by Another Business
If a single-member LLC is owned by another LLC or by a corporation, the income would still be passed through to the owner's return, and no separate return would need to be filed for the single-member LLC. Normal monthly or quarterly returns would still need to be filed to report federal employment taxes, state sales taxes, and other periodic filings, just as for any other business.