Caution: This ruling related only to a charging order against the sole member's interest in the LLC, not to the general liability protection afforded the sole member from the SMLLC
's "internal liabilities"
The IRS has ruled that an SMLLC
can hold stocks, if the LLC owner is eligible and there is no election to treat the LLC as a corporation for Federal income tax purposes.
In holding that the transaction was not a tax-flee reorganization, the court determined that the economic substance of Times Mirror's management of the SMLLC
's assets represented boot; thus, Times Mirror did not receive stock of the requisite 80% value, as required by Sec.
taxed as a disregarded entity must use its owner's accounting methods.
In the example, X has not only protected the appreciation in the TPT assets from creditors, but has also reduced his taxable estate from $1 million to $594,000 (assuming X transferred the remaining 1% SMLLC
interest to another estate planning structure (14)).
Consequently, this article demonstrates that the SMLLC
can be used to blunt the negative effects of section 2512 (a gift tax provision), section 1015 (an income tax provision), and section 2036 (an estate tax provision).
A South Dakota investment SMLLC
with the trust as the sole member is a common structure.
The BLS proposal was very similar to the Tax/RPPTL proposed legislation in providing that a charging order would be the sole and exclusive remedy available to judgment creditors who held judgments against a member of a multi-member LLC (MMLLC), but it also tried to protect SMLLC
members by including SMLLCs
in the general "exclusive remedy" rule, while carving out an exception which allowed for judgment creditors to seek more assertive judicial orders in connection with SMLLCs
The "transparency" of the SMLLC
presents several unique tax utilizations and issues.
must have its own federal EIN and also enroll in the electronic federal tax payment system (EFTPS).
Often, partnership interests are owned through a disregarded entity, such as a single-member LLC (SMLLC
) or a qualified S corporation subsidiary, which will allow the entity's owner to be the partner for income tax purposes while effectively limiting liability for the partnership's underlying debts.
To be more specific, should an employee of a single-member limited liability company (SMLLC
)--where the sole member is a tax-exempt IRC section 501(c)(3) organization--be allowed to participate in the organization's company-sponsored retirement plan?