When advising on a merger of LLCs, tax advisers must consider the application of state merger law, the continuity of the merged entities, and whether the merger constitutes an assets-over or assets-up transaction.
LLCs and LLPs
An entity that is recognized for federal tax purposes as an entity separate from its owners can be classified as one of several entity types, but the available classification options depend greatly on state law and the number of owners or members.
A limited liability company can elect to be classified as a corporation and elect S status by following the procedures discussed here.
The enactment of the Sec. 199A QBI deduction adds a new consideration to the form of entity analysis because the QBI deduction available to a business owner may vary depending on a business’s entity form. This article discusses the differences in calculating the QBI deduction for S corporations and LLCs in a variety of scenarios.
Buy/sell agreements allow LLC members to control the transfer of ownership upon the occurrence of certain triggering events, but they must be carefully structured.
A practitioner who is a true trusted business adviser should consider what the business owner wants to achieve when making this decision.
Converting a C corporation to a limited liability company can sometimes be beneficial, but the tax consequences must be planned for.
A timely election allows a married couple in business together to avoid the partnership filing rules.
Depending on how a taxpayer’s ownership is structured, the sale of a partnership interest can have a Sec. 280G impact on partners or members that are C corporations.
A loan from an LLC member to the LLC must be structured carefully to ensure it is respected as bona fide debt.
Lender Management contended that its activities met the test for an active trade or business under guidelines.
Regulations remove basis benefit for an LLC member when circumstances indicate a plan to circumvent or avoid debt payment obligation.
Procedures for concluding the affairs of the LLC should be included in the operating agreement.
A preparer’s improper change of status of income from active to passive is costly for taxpayers.
A responsible person may be subject to the TFRP if it can be shown he or she willfully failed to pay the trust fund taxes due.
Rules regarding gain or loss on liquidation are a major reason for formation as an LLC rather than as a corporation.
Practitioners should be familiar with the cancellation-of-debt rules to ensure that modifications of an LLC's debts are not significant enough to cause the members to recognize income.
This item explores some common issues encountered by foreign taxpayers adopting transparent U.S. LLCs to invest or operate in the United States.
Determining whether each individual member of an LLC materially participates requires assumptions that can pose problems.
An LLC's required year can change for several reasons. A change in the LLC's required year is treated as automatically approved by the IRS.