DEALING WITH “FLOATING INTERESTS” IN LLC OPERATING AGREEMENTS

The attached excellent new post by Peter Mahler, based on a very recent New York case, describes the very scary legal and  persons consequences that can arise when members of a multi-member LLC fail to define adequately in their operating agreement the circumstances in which the members’ rights to share in LLC profits will change because of changing circumstances.

https://www.nybusinessdivorce.com/2019/10/articles/operating-agreement/the-perils-of-indeterminate-llc-membership-interests/

 

WHEN DOES A BUSINESS BECOME AN ACTIVE TRADE OR BUSINESS FOR START-UP DEDUCTION PURPOSES?

The excellent post under the link below addresses an issue that can be important for many start-up LLCs—namely, the issue of when a business ceases to be a business in formation and becomes an active trade or business for start-up deduction purposes.  The issue was addressed and resolved in a recent Tax Court decision discussed in the post.

Here’s the link:

http://taxblog.dickinson-wright.com/2019/09/recent-case-sheds-light-on-when-a-trade-or-business-begins/

WHAT DOES THE TERM “DISREGARDED ENTITY” ACTUALLY MEAN?

Every LLC lawyer and accountant should have a thorough knowledge of how the Check-the-Box Regulations apply to LLCs and, in particular, about what the Check-the-Box Regulations term “disregarded entity” means—and doesn’t mean.  For a useful discussion about disregarded entities under current law, click on the link below:

https://www.sullivanlaw.com/assets/htmldocuments/JPTE_22-04_Hammell-Kupiec-Ponda.pdf

MEMBER DISCRETION VS. THE IMPLIED COVENANT

Under the link below is an excellent post about a recent decision of the Delaware Court of Chancery employing the implied contractual covenant of good faith and fair dealing to limit the discretion of one member of a Delaware LLC in taking actions affecting a co-member.

Here’s the link:

https://www.klgatesdelawaredocket.com/2019/07/court-of-chancery-finds-that-the-implied-contractual-covenant-of-good-faith-and-fair-dealing-requires-delaware-llc-to-exercise-discretion-in-good-faith/