We have recently completed our first year of online operation and want to thank you for making this past year a success. If you were one of the people affected by the occasional technical difficulties we have experienced as a new e-business, we apologize for any inconvenience and want to let you know that we are working hard to make your next visit to www.alberty.com a more pleasant and efficient experience.
We are also working to update and expand the collection of forms available from our web site. Four to six forms are being updated each month, and five new forms have been added since our site went live. Be sure to check out the What's New page the next time you visit our web site for a report on the latest developments.
LLC Law Changes
Earlier this year, the IRS issued two rulings dealing with the conversion of a single member LLC to a two member LLC and vice versa. While the results of the rulings are not surprising, the rulings are important because they indicate that the IRS is continuing to take a practical approach to LLCs and because they clarify the tax results of some transactions that will become increasingly common as the use of LLCs expands.
In Revenue Ruling 99-5, the IRS ruled that if an existing member of a single member LLC sells part of his or her interest to another person and then continues to participate in the operation of the business as part of a two member LLC, the transaction will be treated as a taxable sale by the existing member of an undivided interest in all of the assets of the LLC to the new member followed by a nontaxable contribution by both members of their interests in the assets to a new entity taxed as a partnership. If, on the other hand, the new member purchases an interest in the existing single member LLC from the LLC itself, the transaction will be treated as a nontaxable contribution by the existing member of the assets of the LLC to a new entity taxed as a partnership and a nontaxable contribution by the new member of the purchase price to the new entity.
In Revenue Ruling 99-6, the IRS ruled that if one member of a two member LLC buys the other member's interest and continues to operate the business as a single member LLC, the transaction will be treated as a dissolution and liquidation of the LLC followed by a purchase by one member of the other member's interest in the assets distributed in the liquidation. If both members sell their interests in a two member LLC to a third person, and the purchaser continues to operate the business as a single member LLC, the transaction will be treated as a sale by the members of their interests in an entity taxed as a partnership. From the purchaser's standpoint, the transaction will be treated as purchase of the assets of the LLC.
We've added several new forms since the site first went live.
Security Agreement with LLC Member's Interest as Collateral (Form 5.4)
Bill of Sale and Assignment (Form 9.2)
Assignment of Lease (Form 9.4)
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