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RESPONSIBILITY FOR FEDERAL EMPLOYMENT TAXES

The managers of LLCs, like those of other business entities, must make timely payment of federal payroll taxes owed in respect of their employees; if they don’t, they may face serious IRS consequences.  In the new post under the link below, Lou Vlahos of the FarrellFritz law firm discusses a recent Tax Court case concerning a corporate “responsible person” issue.  The principles underlying the case apply equally to LLCs.

Here’s the link:  http://www.taxlawforchb.com/2016/11/when-irresponsible-partners-are-responsible-persons/

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TAX ISSUES IN PURCHASES AND SALES OF BUSINESS ENTITIES

If your practice involves forming LLCs, I can guarantee you that before long, it will also involve assisting your LLC formation clients in buying and selling LLCs and other business entities.

The following post by Lou Vlahos of the FarrellFritz law firm contains an excellent summary of several key federal tax rules governing these sales and purchases.

http://www.taxlawforchb.com/2016/10/acquisitive-deals-capitalized-costs-and-termination-fees/

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NEW PARTNERSHIP TAXATION REGULATIONS

On October 5, 2016, the Treasury Department released important new regulations governing major issues in partnership taxation.  As readers will know, partnership taxation is by far the most common federal income tax regimen of multi-member LLCs.  The post under the link below provides a brief but excellent summary and evaluation of the new regulations.

Here is the link:

http://www.lexology.com/library/detail.aspx?g=2d4d5537-f684-4498-8c84-db616baae1b6&l=7SS836V

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LIABILITY FOR SMLLC MEMBER FOR WITHHOLDING ON EMPLOYEES

About 75% of all LLCs are single-member LLCs whose members are individuals.  The case cited below holds that these individuals, as such, can be personally liable for their single-member LLCs’ failure to withhold on employee wages.

HEBER E. COSTELLO, LLC, SCOTT D. COSTELLO, SINGLE MEMBER,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
UNITED STATES TAX COURT
Filed September 29, 2016

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PROPOSED NEW IRC SECTION 2704 REGS

The proposed new Treasury regulations under IRC Section 2704 are important not only for estate planners but also for LLC lawyers concerned about asset valuation issues.  See new blog post under the following link:

http://www.lexology.com/library/detail.aspx?g=e040eb25-8473-4330-aefe-3d411736a05c&l=7S4SLE8

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PARTNERSHIP AUDIT RULES

Every operating agreement for a multi-member LLC taxable as a partnership should contain comprehensive partnership audit provisions under TEFRA and under the Bipartisan Budget Act of 2015.  Once reason that, as of January 1, 2018, BBA will replace TEFRA for most such LLCs is the unending tax litigation that TEFRA has inspired over the past 34 years.  A very recent example of this litigation is the case discussed under the link below.

Here’s the link: http://www.taxnotes.com/tax-notes-today/litigation-and-appeals/tefra-didnt-preclude-court-considering-partners-defense/2016/09/07/18588966

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TEMPORARY REGULATIONS UNDER THE NEW BBA PARTNERSHP AUDIT RULES

Under the link below is a useful new post about the new Treasury Department temporary regulations under the new Bipartisan Budget Act of 2015 partnership audit rules.

Here’s the link:   http://www.lexology.com/library/detail.aspx?g=136c9a21-653f-4c39-bc28-635a1965e81f&l=7SG8NLW

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BBA PARTNERSHIP AUDIT RULES

As many of you will know, Congress in November 2015, enacted, in the Bipartisan Budget Act of 2015, major and draconian new partnership audit rules.  Congress painted with a broad and messy brush, and there are dozens of issues as to the meaning and implementation of these rules.  All of these issues must be resolved, if at all, by Treasury regulations.  Yesterday, the IRS announced that Treasury is aiming to issue these regulations by the end of this calendar year.

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LLC BANKRUPTCY

Over time, one or more of our LLC clients may go bankrupt.  If they do, can a bank provide in the LLC’s operating agreement that the LLC may not file for bankruptcy except with the bank’s consent?  According to the very recent decision of the Delaware bankruptcy court, discussed in the post under the link below, the answer is no.

Here’s the link:  http://www.lexology.com/library/detail.aspx?g=2b11d4bd-476d-4136-8dc6-9ca097c4945a&l=7SEHPUL

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NEW IRS REGS ABOUT GRANTING OF PROFITS INTERESTS TO LLC “EMPLOYEES”

Profits interests can be a highly useful way of attracting and reward LLC employees, independent contractors and investors, but they can involve federal tax pitfalls.  The post under the link below summarizes new IRS regs that address whether “employees” of multi-member LLCs taxable as partnerships will be treated for federal tax purposes as partners if the LLC grants them profits interests.

Here’s the link:  http://www.jdsupra.com/legalnews/navigating-non-compete-and-other-key-75446/

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