The LLC Series: Series LLC скачать в хорошем качестве

The LLC Series: Series LLC

Howdy, this is David Groce, your Texas Tax and Law Man. Today, we wrap-up our discussion of LLCs by talking about the newest model of LLC - the Series LLC. We said that LLCs are like trucks - some are simple - like the single member LLC, some are old and formal - like LLC C Corp, some are like El Caminos and Mullets - the LLC S Corp, and some are complex and sophisticated like a crane truck - the LLC Limited Partnership. And last week, we looked at the slide-in pick-up bed camper - the LLC Disregarded entity. Today, let’s talk about the Series LLC. A Series LLC is like the truck-trains they use in Australia. In America, we limit the length that a truck and trailer can be to operate on our highway system. For the Interstate highway that limit is 75 feet long. We’ve seen those UPS trucks with one truck and two little trailers. In Australia and other parts of the world with long and remote distances, there are no limitations on the length of trailers a truck can pull. You can wind up with a truck pulling two, three or four trailers. When I was a kid, daddy wanted to go camping and mama said she would go, if daddy would get her a camper. Well he did. But then he wanted to carry his motorcycles and his boat. In 1970 something, we were pulling our own retro truck-train with a van, a camper, a boat, and motorcycles behind. A quick search on the web shows that people today have the same idea. As to LLCs, a Series LLC is designed to let you create one LLC and then have different series of LLCs with separate legal protection all within the single LLC. This was really an attempt to formalize the LLC disregarded entity strategy and allow the owner to file one tax return. In our practice, we think the Series LLC has some good uses, specifically for owning multiple rental properties where you want each rent house to have firm liability protection, but still only want to file one tax return. For the right fact pattern, this is a great tool. However, as we have looked at series LLCs and how other people are using them in different states and for even big corporate deals, we think you can reach some unintended consequences from lumping too many businesses or too many different investors inside of a single series LLC. First, the Series LLC acts require that each Series LLC have an ascertainable asset or business function and that we account and track the activity of that business. This means you have to track income and expense separately for each Series LLC to be able to comply with the act. Second, the Series LLC advantage is that while you track the income and expense of each series separately, you file only one consolidated tax return. If you have multiple different owners in each series inside the series LLC, how do you report the gains and losses of each series appropriately to each partner in each series without filing a separate tax return for each series? If it is the same owner of all series, then that is no big deal. However, if you have five owners in Series 1, three different owners in Series 2, and six owners in Series 3, how do you prepare one tax return and generate K-1s to all those different owners? The simple answer is you can’t, at least not simply. Third, even if you could account and report the tax appropriately for each different partner in each different series, combining all the income on the single return could trigger state income tax or franchise taxes in states that have income thresholds. In Texas, if an LLC has less than $1,000,000 in gross sales, then you do not owe state franchise tax. One dollar over, you owe and have to pay. In the end, we think Series LLCs work for grouping rent homes, airplanes, rental equipment, or different pieces of properties where we want separate legal protection, we want to file one federal income tax return, and we will not trigger the state franchise tax. If we meet all those criteria, then come on over and you and I will put together the Mad-Max truck-train and step into the next generation of legal protection. Thanks for joining us through this series on LLCs. If you have a friend who is thinking of starting a business, expanding, or spinning off a company, send them our way. We’d love to help them and you. Until next time, adios.