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let's talk about transfers like when there's changes in ownership of an LLC that's gonna have an impact on allocations because somebody's coming in is leaving mid-year somebody's coming in mid-year you have to figure out how you allocate a partial year that's impartial year's income or loss to each of those members to the transfer rule and the transfer rate and there's different methods you can you do an interim closing of the books on the date of the transfer or in certain situations you can just Pro rate and say this person was here for 7 months so we're gonna give them 7 twelfths of the income how you're gonna do that or who's gonna make that decision is something that should be addressed in the operating agreement when a transfer occurs that can happen in one of two ways it can be a sale among owners so one owner sells to another or sells their interest to a third party or it can be a retirement which effectively means that the partner is withdrawing the memory entity may actually be redeeming their interest from them they're not doing the transaction with the other partners directly it's between the exiting partner and the entity those will have different tax consequences a little bit beyond scope we're going to talk about today how those consequences what they are and how they will affect things but depending on your situation it can have different ramifications so it's something to think about whether you want to require that they be done as sales or as retirements when somebody leaves or at least who's going to make that decision whether it's going to be the exiting person or the remaining people who get to make the decision of how its structured you
Thanks for your comment Sheldon Fujino, have a nice day.
- Terry Novad, Staff Member
if you are changing the owners of your limited liability company a lot of times people ask how do you do this it's not like a corporation we have stock and on the back of that certificate you endorse it and say who is going to and they record it in a stock ledger may be subject to some kind of an outside contract like a shareholder agreement instead with the limited liability company the ownership is set forth in a contract between the members that's called a limited liability company operating agreement and in order to change the ownership what you do is you prepare an amended and restated limited liability company operating agreement and so if you add additional members each time you add members you amend that operating agreement so maybe that they have a first amended agreement when you've changed members once you have a second amended agreement when you change it again and so on but we also prepare if you'd like us to prepare an amended and restated opportunity for you is we also prepare a resolution from the existing members saying who the current owners are and what percentage the members and they sign off transferring interests to the new members and so that there's a handoff if you will between the old members and the new members and what is the consideration paid for that what is the dollar amount paid for that transfer of ownership and that's part of the benefit of using Inc now is we can prepare an amended and restated operate agreement for you along with that resolution and the cost of that service is $250
Thanks Cheryll your participation is very much appreciated
- Terry Novad
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I've studied chondogyo at Lane College in Jackson and I am an expert in zoroastrianism. I usually feel cranky. My previous job was cartographer (map scientist) I held this position for 26 years, I love talking about squash and martial arts. Huge fan of Alvin & the Chipmunks I practice tumbling and collect scouting memorabilia.
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