Category: Choice of Entity—General

The article cited below will be of interest to all LLC lawyers.  I’ve discovered it on WestLaw, but it may also be available elsewhere.

Here’s the cite:

104 PRAC. TAX STRATEGIES 04
Practical Tax Strategies
**1
March, 2020
Low-Profit Limited Liability Company
Copyright (c) 2020 RIA
Kelsey Feldmeier, Cindy Lee, and Ken Milani
THE LOW-PROFIT LIMITED LIABILITY COMPANY: A LIFELINE TO STRUGGLING INDUSTRIES

There are three main reasons:

• LLCs have a much simpler legal structure than corporations, and this structure is more practical for most small businesses than the corporate legal structure.
• Both corporations and LLCs provide statutory limited liability. However, multi-member LLCs provide certain additional and important statutory business asset protections—called charging order protections and pick-your-partner provisions—that corporations don’t provide.
• The best federal tax regimen for individuals who own single-owner businesses is taxation as individuals, and for multi-owner businesses it is Subchapter K.  Under the relevant federal tax rules, LLCs that are owned by one individual can be taxed as individuals and multi-member LLCs can be taxed as partnerships.  This federal tax treatment is unavailable to owners of corporations.

The post under the link below provides a brief but excellent introduction to public benefit LLCs—a new type of LLC that all LLC lawyers should be familiar with.

Here’s the link:

https://www.lexology.com/library/detail.aspx?g=a16eab0b-bcb9-40b2-a7c4-e77f753feedd&l=8FB4112

Tax choice of entity is a key procedure in any LLC formation, and with the enactment of IRC section 199A, all existing LLCs should revisit tax choice of entity.  The new post by Lou Vlahos of FarrellFritz under the link below contains a short but excellent post about tax choice of entity and S corporations.

Here’s the link:  https://www.taxlawforchb.com/2019/05/determining-the-value-of-an-s-corp

The new law journal article cited below is important for every tax professional who represents section 199A clients.

Here’s the cite:

RETHINKING THE OBVIOUS: CHOICE OF ENTITY AFTER THE TAX CUTS AND JOBS ACT
16 PTTAXR 67
Leo N. Hitt
Pittsburgh Tax Review

Can an Entity Be a Partnership and a Corporation at the Same Time?
The post in Peter Mahler’s business divorce blog under the link below addresses the above fascinating question.

Here’s the link:  https://www.nybusinessdivorce.com/2018/05/articles/partnerships/corporate-frankenstein-partnership-form-corporation-lives-another-day/