Posted by Rich-CA on March 05, 2009 at 13:44:10:
From Wiki:
"Membership Interest
A member’s ownership interest in an LLC is often called a membership interest. Membership interests are often divided into standardized units which, in turn, are often called shares or units. Unless otherwise provided for in the operating agreement, a member’s right to receive distributions or exercise member rights over the LLC is proportionate to their membership interest. Membership interests and member rights are regulated by state law. "
The confusion may be related to the use of the term “shares” which is used both in terms of “shares of stock” and “shares of ownership”. LLCs do not issue stock. Only corporations issue stock. If somebody issed stock for your LLC understand that this is not stock the way it is for a corporation but merely ownership shares, which designate a percentage of the LLC that each “share” owns. Since LLCs do not issue stock, you would not qualify for any special rates for stock. Check with your CPA and tax attorney for details. Often different people have different interpretations and I always go with the interpretation of the person whose license is on the line and needs to defend their position if challenged.