Posted by Bronchick on January 05, 1999 at 09:12:21:
Post
LLC Question… - Posted by JPiper
Posted by JPiper on January 03, 1999 at 19:01:33:
I notice that an LLC that has 2 or more members will be classified as a partnership for federal income tax purposes. I also notice that a single-member LLC may have a problem with a charging order if the member attempts to cease distributions to frustrate the creditor.
Within the above context, are a husband and wife viewed as a single member?? Can a husband and wife be considered 2 members?? Is there a way that a single member LLC can deal with the distribution issue relative to a charging order??
By the way, for anyone interested in the subject of LLC’s and family limited partnerships, I would highly recommend Bill Bronchick’s course.
JPiper
Re: LLC Question… - Posted by Jen (NE)
Posted by Jen (NE) on January 04, 1999 at 12:34:37:
Hi Jim… I have Bronchick’s course too. I believe that a husband and wife could be either single member or 2 members, depending on how you file your tax returns.
On page 22 and 62 Bronchick states that when you are in financial trouble (single member LLC), sell a 2% interest to a neutral party, such as a corporation, friend, or distant relative. Now there is a “remaining” member to veto the cash flow distribution. Make sure the 2% is at market value or your creditor will try to set this aside as a fraudulent transfer.
Re: LLC Question… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on January 04, 1999 at 06:58:27:
For federal income tax purposes, LLC is treated as a partnership unless you opt for corporate treatment. Husband and wife may each be partners. For certain very specific purposes, they may be treated as one, but the LLC will not be disregarded as a single entity.
I unfortunately do not know enough to answer the remainder of your question.
John Hyre
Re: LLC Question… - Posted by PBoone
Posted by PBoone on January 03, 1999 at 21:25:54:
Jim,
Shar and I (husband & wife) are the only two members in the LLC. We set it up that way because at the time I had other income outside the company and as an LLC we had the choice of how much of the profit and losses were directed to which member.
With regards to our credit we make sure to sign all documents with a disclaimer of “Managing Member” and do not personally guarantee anything. We have yet to have a residential lender accept the LLC as a borrower. We have been told LLC’s are available for loans above 1,000,000 our largest purchase to date is only 500,000. I will let you know when we are able to get a loan for the LLC and how it happened
Pat
Re: LLC Question… - Posted by Rob FL
Posted by Rob FL on January 03, 1999 at 19:44:49:
From what I have READ on the issue. Husband and wife can be two separate members. You might also be able to have 2 corporations or 2 trusts as members. I sent you an email also.
Re: LLC Question… - Posted by Bronchick
Posted by Bronchick on January 04, 1999 at 12:40:48:
I have a private letter ruling from the IRS on this issue. It says that a husband and wife can file either as a partnership or as a joint sole-P, in which case the entity is disregarded for Federal income tax purposes.
Re: LLC Question… - Posted by Reif
Posted by Reif on January 03, 1999 at 22:46:35:
Pat,
Please clarify about your credit.
You say the bank won’t lend to the LLC, yet you sign as “managing member.”
Sounds like the loan docs must be in your name and therefore if you default you are liable not the LLC - or as usual have I missed something?
Thanks,
Reif
Curious… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on January 05, 1999 at 06:38:58:
Is that PLR pre- or post- check the box?
Re: LLC Question… - Posted by PBoone
Posted by PBoone on January 04, 1999 at 10:15:34:
No misunderstanding on your part. My error in writing was a clarification.
The banks have yet to give us a mortgage in the LLC’s name. Mortgages go into my name personally after close we deed it to a trust w/ the LLC as the beneficiary.
Vendors, suppliers for materials will allow the LLC to stand on its own. With these types I sign as “Managing Member” This allows me to be an officer of the company not the person responsible for payment therefore placing responsibility on the company to make all payments.
Pat