TAX CUTS AND JOBS ACT

By , January 15, 2018 3:43 pm

I’m in the process of reviewing the Tax Cuts and Jobs Act (the “Act”).  The best source I’ve found thus far for understanding the act as a whole and for obtaining basic explanations of its individual provisions is the KPMG study under this link:  https://home.kpmg.com/content/dam/kpmg/us/pdf/2017/12/tnf-conference-agreement-dec18-2017.pdf   However, if any readers of this post know of any better resources for the above purpose, please let me know by e-mail.

However, my main focus in studying the Act is on identifying and understanding the provisions of the Act that affect the federal taxation of single- and multi-member LLCs and their members.  The best source I have found so far for that purpose is Lou Vlahos’s posts in his website entitled  Tax Law for the Closely Held Business.  The link for that website is  https://www.taxlawforchb.com/

Again, however, if anyone knows of a better source concerning the impact of the Act on LLCs and their members, please send me an email about it.

“BARE NAKED ASSIGNEES”

By , January 12, 2018 12:48 pm

The post by Peter Mahler under the link below is the best brief discussion I’ve seen anywhere about the rights of “mere” (or “bare naked”) assignees of LLC membership rights.  The key notion is:  If an assignee has any legal rights whatsoever as an assignee, he or she must also have legal remedies by which to protect those rights.

But a well-drafted operating agreement will ensure those remedies as a contractual matter.

Here’s the link:

https://www.nybusinessdivorce.com/2017/11/articles/access-to-books-and-records/can-bare-naked-assignee-demand-access-llc-records/

THE 2017 TAX ACT: OTHER “PASS-THROUGH” TAX PROVISIONS

By , January 8, 2018 5:53 pm

Below is a link to the latest in the series of excellent summaries of the pass-through provisions of the Trump tax reform act by Lou Vlahos of the FarrellFritz law firm:

https://www.taxlawforchb.com/2018/01/the-2017-tax-act-other-pass-through-tax-provisions-part-ii/

THE NEW DEDUCTION FOR QUALIFIED BUSINESS INCOME

By , January 4, 2018 4:35 pm

Under the link below is an excellent explanation of the above new deduction.

Here’s the link:

https://www.taxlawforchb.com/2017/12/the-new-deduction-for-qualified-business-income-tax-simplification-gone-awry/#

TOP TEN BUSINESS DIVORCE CASES OF 2017

By , January 3, 2018 3:50 pm

Under the link below is Peter Mahler’s latest Business Divorce blog post.  It identifies and summarizes what Peter views as the top ten business divorce cases of 2017 as addressed in his posts.  Most of these cases involve multi-member LLCs, and most of them have obvious and important lessons for lawyers drafting LLC operating agreements.

Here’s the link:  https://www.nybusinessdivorce.com/2018/01/articles/annual-top-10-cases/top-10-business-divorce-cases-2017/

THE TRUMP TAX REFORM ACT AND PASS-THROUGH ENTITIES

By , December 22, 2017 5:15 pm

Under the link below is a brief but excellent post about the impact of the Trump Act on pass-through entities and their owners.

Here’s the link:  http://blog.williamsparker.com/businessandtax/2017/12/18/reform-business-tax-reform/

NEW PROPOSED REGULATIONS UNDER BBA PARTNERSHIP AUDIT RULES

By , December 20, 2017 5:46 pm

On December 15, 2017, the U.S. Treasury Department issued proposed regs that permit partnerships to “push out” IRS audit adjustments to partners who are themselves partnerships in “tiered” partnerships.  Tiered partnerships are partnerships in which one or more partners in one or more levels of partners are themselves partnerships—i.e., partnerships whose partners are partnerships.  This is, of course, very good news for tiered partnerships.  We can only hope that the Treasury will also issue rules that permit partnerships to be BBA “electing partnerships” even though one or more of their members are revocable trusts or single-member LLCs whose members are individuals.

The new proposed regs are REG-120232-17 and REG-120233-17.

ARTICLE ON HOW TO DRAFT LLC OPERATING AGREEMENTS FOR MEMBER BANKRUPTCY

By , December 15, 2017 3:07 pm

Below are the title of an excellent article on how to draft LLC operating agreements to address a key bankruptcy issue and its first paragraph:

72 Bus. Law. 981
Business Lawyer
Fall, 2017
Article
David L. Bury, Jr.a1 Thomas T. McClendon
Copyright © 2017 by the American Bar Association; David L. Bury, Jr., Thomas T. McClendon
PLANNING FOR THE UNEXPECTED: DRAFTING OPERATING AGREEMENTS TO PROTECT LLC MEMBERS FROM ANOTHER MEMBER’S BANKRUPTCY

Typically, the possibility that a member might end up in bankruptcy is an afterthought when parties form an LLC. However, a member’s bankruptcy can wreak surprising results for the LLC, including a Chapter 7 trustee taking over management of the LLC, selling the bankrupt member’s LLC interest to a third party, and seeking judicial dissolution of the LLC. Unwittingly, the LLC and its members can find themselves embroiled in disruptive and costly litigation. This article seeks to equip attorneys, especially those drafting operating agreements, to advise on and guard against these dangers. First, the article discusses two critical bankruptcy concepts in the LLC context: “property of the estate” and “executory contracts.” Second, it surveys the different ways bankruptcy courts treat LLC interests and operating agreements. Finally, this article provides several practical suggestions for improving operating agreements on the front end so that LLCs and their members are better prepared for and, hopefully, more protected from member bankruptcies.

DEADLOCK

By , December 13, 2017 3:52 pm

In the post under the link below, Peter Mahler discusses a Massachusetts Supreme Court case providing a judicial a definition for the term “deadlock” under the deadlock-dissolution provision in the Massachusetts corporate statute.   Peter’s posts are always excellent, but in my view, the post below ranks as one of his very best, and the definition in the Massachusetts case applies just as much to LLCs as to corporations.

A key question about the definition for LLC formation lawyers is this:  What are its implications in LLC formation practice—i.e., in planning, negotiating and drafting LLC operating agreements?  I’ll try my hand at addressing that question in a forthcoming post.

Here’s the link:  http://www.nybusinessdivorce.com/2017/10/articles/deadlock/court-defines-true-deadlock/

ABA BUSINESS LAW TODAY–NOVEMBER 2017 EDITION

By , December 12, 2017 3:55 pm

The November 2017 edition of the ABA’s Business Law Today has just appeared.  For a table of its contents, click here:

https://www.americanbar.org/groups/business_law/publications/blt/2017/11.html

As you’ll see, the November 2017 edition contains many articles relevant to LLC lawyers.