THE NEW DEDUCTION FOR QUALIFIED BUSINESS INCOME

By , January 4, 2018 11:37 am

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 10:53 am

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 12:19 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 12:48 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 DRAFTING LLC OPERATING AGREEMENTS FOR MEMBER BANKRUPTCY

By , December 15, 2017 10:08 am

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 10:54 am

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 10:56 am

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.

 

UBE LAW: LOFTIUM UNWITTINGLY FORMS PARTNERSHIPS WITH HOMEBUYERS

By , December 7, 2017 11:22 am

Non-tax choice of entity (i.e., choosing on non-tax grounds between LLCs and non-LLC entities as the best business entities for one’s entity formation clients) is often a key step in the LLC formation process.  In order to be competent in non-tax choice of entity, you need a fairly detailed knowledge of all of the key business organization law features of each relevant type of entity and how these features compare with the corresponding features of the other relevant types.  The post below provides perhaps the best—and most sophisticated—discussion I’ve ever seen about how a business arrangement—here, something vaguely like a loan—can actually be a general partnership.

Loftium Unwittingly Forms Partnerships with Homebuyers

PETER MAHLER’S LATEST BLOG

By , December 5, 2017 10:06 am

As I think all of you know, I view Peter Mahler’s blog on business divorce to be among the best of all blawgs, and indispensable for LLC lawyers.  His latest post, under the link below, provides his reflections on the tenth anniversary of the launch of his blawg.  It’s fascinating in itself but also for people like me, who have our own specialized blawgs; and it will be fascinating for you if you are considering launching a blawg of your own.

Here’s the link:  https://www.nybusinessdivorce.com/2017/12/articles/uncategorized/reflections-ten-years-blogging/

DEBT VS. EQUITY IN CLOSELY HELD BUSINESSES

By , November 30, 2017 11:02 am

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/