Category: LLC Taxation

LLCS AS PASS-THROUGH ENTITIES

By , March 28, 2018 5:43 pm

Almost all single-member LLCs and multi-member LLCs are pass-through entities.  Under the link below is an interesting discussion of pass-through entities by the Brookings institution.

Here’s the link:  https://www.brookings.edu/research/9-facts-about-pass-through-businesses/

CHANGES IN THE US FOREIGN TAX RULES UNDER THE TCAJ ACT

By , February 28, 2018 4:30 pm

For those of you for whom changes in the above rules are relevant or at least interesting, these changes have been skillfully summarized by Lou Vlahos of the FarrellFritz firm in the post under the following link:  https://www.taxlawforchb.com/2018/01/u-s-taxation-of-foreign-income-after-tax-reform/

NEW HAMPSHIRE BUSINESS TAXES

By , January 23, 2018 5:37 pm

For New Hampshire business lawyers and accountants and others who may be interested:

The New Hampshire Department of Revenue Administration has confirmed that for tax periods ending on or after December 31, 2018, the business profits tax rate is decreased to 7.9% (previously 8.2%) and the business enterprise tax rate is decreased to 0.675% (previously 0.72%). These decreases were contingent upon state revenue collections reaching a specified threshold by June 30, 2017. The Legislative Budget Assistant has now confirmed the threshold was met.

Please note that 2017 New Hampshire legislation added two further rate reductions for tax periods ending on or after December 31, 2019 and for tax periods ending on or after December 31, 2021.

See Technical Information Release TIR #2018-001, New Hampshire Department of Revenue Administration, January 5, 2018.

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.

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/#

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.

DEBT VS. EQUITY IN CLOSELY HELD ENTITIES

By , November 30, 2017 3:59 pm

Under the link below is a superb post from FarrellFritz on the issue of when an investor’s transfer of cash to a closely held entity is debt and when it is equity for federal tax purposes.  In my LLC practice, this issue arises often.  Perhaps also in yours.  In any event, you should know the rules and advise your clients about them—they have to characterize these transfers clearly in proper documents and comply with the terms of the documents.

Here’s the link:  http://www.taxlawforchb.com/2017/09/debt-vs-equity-form-substance-matter/

NON-TAX LAWYERS AND THE BBA PARTNERSHIP AUDIT RULES

By , November 28, 2017 5:02 pm

I’ve recently completed an article in which I propose that even if you’re not a tax lawyer, you have a duty to give a warning about the BBA partnership audit rules to your clients that are LLCs taxable as partnerships or members of these LLCs.  As you may know, these rules will become effective for partnership taxable years beginning on January 1, 2018.  A link to the article is below.  If you have any comments on the article, I’ll be very grateful for them.

Here’s the link:  http://www.cunninghamonoperatingagreements.com/wp-content/uploads/Article-for-ABA-or-other-publication-re-non-tax-lawyers-and-the-BBA-PARS-10-23-17.pdf