Posted by Rich-CA on September 09, 2007 at 08:51:15:
In our case, we started off with the properties in our names (JT/Tenants in the Entirety where common property was not a choice). We created a parent company where the two of us were the owners in NV. NV is a community property state and the plan was to transfer the holding LLC into the Living Trust anyway (which would be the sole member since the two of us only have one Trust). The sub LLCs (operating companies and asset companies) are all owned by the parent LLC as SMLLCs…
Our CPA maps the LLCs to our Sched E and we don’t file a Sched C. She deals almost exclusively with RE investors, most of who have multiple state holdings.
In CA we also have funny laws regarding companies where husband and wife are the only employees (such as you don’t need workman’s comp, but if you hire your child you then need it), and I’m certain NY has a lot of odd laws on the books that make this an difficult thing to untangle.
My suggestion would be to create the SMLLC in another state where the husband and wife are seen as one person and then rsgister to do business in NY.
Single member LLC/ husband and wife -Bronchick?? - Posted by Frank Chin
Posted by Frank Chin on September 06, 2007 at 11:38:52:
I was discussing the issue of “SMLLC” with my CPA, telling him that a “husband and wife” is a single member. My CPA said he never heard of such a thing.
Frank, while this is really outside my area, I’m seldom short of opinions. It’s been on my list of things to do to create another entity and it’s pretty easy to do.
I think that most States recognize the SM LLC fairly commonly now, however it wasn’t always the case. It seems to me that Wyoming was one of the first States to accept single member LLC’s, but it’s a moot point now that other States are going along with that program.
I think that one of the best values is to buy a LLC formation kit from Nolo.com, the lont-time legal self help publisher in (Republic of) Berkely, CA. Their material is excellent, reliable, accurate and affordable. I’ve been a customer for well over 25 years.
If you’re still noodling this around, consider buying their book, download it for something like $50-75, you’ll have it right away, and you’ll then know more than most people you’ll ever meet (including your CPA).
Posted by Frank Chin on September 07, 2007 at 02:54:34:
Rick:
So far I found “revenue procedure 2002-69”, which appears to allow “husband and wife SMLLC’s” in “community property states”.
My CPA wanted to know if it applies in a state like NY State which is not.
Bronchicks’s post seem to indicate it applies everywhere, as the original question touched on local laws.
I realize laws on LLC’s are evolving, and NY recognizes SMLLC’s and has a line for paying annual fees for SMLLC’s, but the issue is if a “husband and wife” can file as a SMLLC under 2002-69. Apparently, for income tax purposes, NY State follows the Federal returns, so if the taxpayers considers the LLC disregard entity on the Federal taxes. it’ll be so for state purposes.
Posted by Rich-CA on September 08, 2007 at 19:21:01:
I actually purchased the Nolo Press software called “LLC Maker”. It not only has up to date forms for each state which are filled in using a Q&A format, each printed set has filing costs and instructions.
My CPA actually told me the husband & wife as a “single member” is for community property states, where there is no separation until divorce (assuming no pre-nup in place). This would really be an attorney question.
I started using CO as the state where I open my LLCs. One, they allow single member LLCs, two, the e-filing fee from their website is $25, and three they have no further filing requirements.
You could open you LLC in CO and file for “foreign business entity” in NY. It might be less expensive.
If you decide to go the CO approach, I can shoot you an e-mail of the attorney in Colorado Springs I use for my CO LLCs. He does not charge a fee for this unless he has to do something (like if you’re served papers). The whole process takes about 10 minutes for the LLC and 10 minutes for the EIN from the IRS.
Posted by Frank Chin on September 09, 2007 at 04:48:00:
Thanks Rich:
I’ve since followed a few extensive discussions the technicalities of this, on several other legal forums. It appears that the issue is somewhat different for schedule E and schedule C filing.
For schedule E, the determinant is joint ownership of the property as on the deed. If husband and wife is a single unit on the deed, it is so for single member LLC status, community property state or not.
For schedule C, whether it is a community property state is the determinant, as it also affects the limitation on the “self employment” tax. In sommunity property states, the SMLLC uses the limit for one person.
The original Bronchick post refers to SMLLC filing status for both schedule C and E fiing, and appears to indicate it applies everywhere. Of course, the opinion he cited seem to be in 1997, abd Rev. Proc. 2002-69 was probably issued in 2002.