POST FROM PETER MAHLER ABOUT VALUATION AND INSOLVENCY

By , February 13, 2018 6:13 pm

The link to Peter’s post is below.  Here is Peter’s introduction to the post:

“Delaware Chancery Court Rulings Address Valuation and Insolvency Disputes

By Peter Mahler on Jan 15, 2018 06:11 am

If you’re a business appraisal aficionado, you won’t want to miss this week’s New York Business Divorce featuring two recent decisions by the Delaware Chancery Court involving fair value and insolvency determinations.”

The link:  https://www.nybusinessdivorce.com/2018/01/articles/valuation/delaware-chancery-court-rulings-address-valuation-insolvency-disputes/

LLC RIGHTS OF ESTATE OF INDIVIDUAL DELAWARE LLC MEMBER UPON THE MEMBER’S DEATH

By , February 9, 2018 8:42 pm

The post by Peter Mahler under the link below addresses the above issue.  It is a key issue in any LLC operating agreement or LLC agreement for a multi-member LLC, whether the LLC is a Delaware or a non-Delaware LLC.  The basic lesson:  How the agreement addresses the issue trumps the governing LLC act (especially in Delaware but very probably under all other LLC acts).

Here’s the link:

https://www.nybusinessdivorce.com/2017/12/articles/delaware/delaware-contractarian-principles-prevail-appeal-deceased-ace-hotel-founders-llc-interest/

ARTICLE ABOUT UNWRITTEN OPERATING AGREEMENTS

By , February 6, 2018 12:40 pm

The article cited below about the above topic is by a leading LLC scholar.  It merits careful study.

Here’s the cite:

Business Law Today
September, 2017
Department
Daniel S. Kleinberger
Copyright © 2017 by the American Bar Association; Daniel S. Kleinberger

FROM THE UNIFORM LAW COMMISSION: LIKE GREAT BRITAIN, A LIMITED LIABILITY COMPANY MAY HAVE AN UNWRITTEN CONSTITUTION

Under Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286, 291 (Del. 1999), the operating agreement is indubitably the “cornerstone” of a limited liability company. This column examines the problems arising when that cornerstone is unwritten.

ILLINOIS LLC ACT

By , January 25, 2018 5:45 pm

Below are the citation and first paragraph of a law journal article about real estate transactions under the new Illinois LLC Act.  The concepts in the article are likely to be important not only in Illinois but also in many other states.

30 DCBA Brief 20
DCBA Brief
December, 2017
Article
Article Editor Brian Dougherty
Ken Clingen, Tom Sisul
Copyright © 2017 by DCBA; Ken Clingen, Tom Sisul

MEMBER AND MANAGER AUTHORITY AFTER THE 2017 ILLINOIS LIMITED LIABILITY COMPANY ACT AND ITS EFFECT ON REAL ESTATE TRANSACTIONS

Illinois substantially amended its Limited Liability Act effective July 1, 2017. A recent DCBA Brief article summarized the major changes wrought by the 2017 Act. This article adopts a narrower focus by exploring the ways in which the 2017 Act changed the prior “member managed and “manager managed” regime and how that affects the authority of LLC members and managers to act on behalf of the LLC, particularly with respect to real estate transactions. We also include insight from Richard Bales of Chicago Title on how these changes affect real estate title and diligence issues.

 

 

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.

WHEN IS A PERSON A “MEMBER” OF AN LLC?

By , January 18, 2018 1:33 pm

Peter Mahler’s post, under the link below, discusses a recent New York trial court case addressing under the Delaware Limited Liability Company Act an issue about whether a particular interest holder in the Delaware LLC in question was a member of the LLC for purposes of statutory access to the LLC’s books and records.

For lawyers who draft LLC operating agreements, the lesson of the case and the post is this:  Make sure that operating agreements that you draft have no ambiguities as to who is and who is not a member.

Here’s the post:

http://www.nybusinessdivorce.com/2017/10/articles/access-to-books-and-records/member-name-may-access-llc-books-records/

INTERCOMPANY COMPENSATION

By , January 16, 2018 2:49 pm

It is often useful to a business to protect its assets through a holding company/operating company structure consisting of two LLCs; or to manage one or more entities through the use of a separate LLC management company.  The post by Lou Vlahos of the FarrellFritz law firm under the link below provides excellent guidelines for determining intercompany employee compensation arrangements in these situations.

Here’s the link:

https://www.taxlawforchb.com/2017/10/determining-the-appropriate-fee-for-services-rendered-to-a-related-company/

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/