The rising popularity of SMLLCs in tax and business planning.

Single-member limited liability companies (SMLLCs) have become popular in the past decade as taxpayers take advantage of opportunities presented by the check-the-box regulations. This article examines common situations in which SMLLCs are useful and identifies some potential pitfalls with their use.

A decade has now passed since the check-the-box (CTB) regulations became effective. (1) Tax and business planners have taken advantage of the flexibility provided by the regulations to structure a wide variety of transactions. Perhaps the most beneficial tax and business planning opportunity encouraged by the CTB regulations is the use of the single-member limited liability company (SMLLC). This article provides a brief overview of the law in this area, then discusses some common situations in which the SMLLC has become an entity of choice. It concludes by identifying some potential pitfalls regarding the use of SMLLCs.

State LLC Law

If an LLC is properly organized and operated, state laws afford liability protection to the LLC's owners. (2) State LLC laws also generally provide significant operational flexibility for LLCs that is not generally available to corporations. For instance, LLCs may be managed by one or more managers or by the members. In addition, state LLC laws are often not as stringent compared with corporate laws on shareholder and board meetings, etc., which may appeal especially to LLCs with fe...

If you are already a vLex customer, Access Here