S.A. Gregg: is an LLC member a general partner or a limited partner for purposes of the PAL rules?

Article Abstract:

The author discusses the US District Court for Oregon's decision in S.A. Gregg, in which the court ruled that a limited liability company member constituted a general rather than a limited partner and therefore qualified under the passive activity loss rules as propagated under IRC section 469.

Cases, Passive activity (Taxation)

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Check-the-box regulations raise questions concerning the ability of a partnership or an LLC to elect out of Subchapter K

Article Abstract:

Members of business entities such as partnerships or limited liability companies who want to opt out of Subchapter K may be prevented from doing so by the check-the-box entity classification regulations. Under previous law, certain entities could elect out under IRC sec. 761(a). The check-the-box regime inadvertently introduces a restriction on unicorporated entities never contemplated by Congress or the IRS in their move to modify classification rules.

Laws, regulations and rules, Tax elections

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Investment company ruling provides small comfort to transferors funding an FLP or FLLC

Article Abstract:

The IRS in Letter Ruling 9811022 provided inconclusive guidance regarding its treatment of securities transfers to family limited partnerships. The partnership in the ruling was not considered an IRC section 351 investment company and no recognition of gain was required on the stock transfer. The favorable private ruling cannot be relied upon, particularly since the ruling included a reference to the potential issuance of IRS regulations on the issue.

Tax Law, Public Finance Activities, Planning, Investment companies, Family-owned business enterprises, Family-owned businesses

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