The Rising Popularity of SMLLCs in Tax and
Business Planning—Footnotes

¹ TD 8697 (effective 1/1/97).

² See, e.g., Del. Code Ann., tit. 6, §18-303.

³ See, e.g., Utah Code Ann. §48-2c-605 (“The failure of a company to maintain records, to hold meetings, or to observe any formalities or requirements imposed by this chapter or by the articles of organization or the operating agreement is not a ground for imposing personal liability on any member, manager, or employee for any debt, obligation, or liability of the company”).

⁴ See, e.g., NY LLC Law §203(c); NY Partnership Law §10.

⁵ See http://corporations.azcc.gov/2006-QrtRpt.pdf.

⁶ For example, Kentucky saw an increase of more than 100% in annual LLC filings from 2000 to 2006 (see www.sos.ky.gov/business/filings/statschart.htm); Utah saw an increase of over 58% from 2003 to 2005 (see www.corporations.utah.gov/statistics.html).

⁷ T. A. Morrissey, 296 US 344 (1935).

⁸ See Secs. 1361(b), 1361(b)(1)(D), 1371(a) and 1375(a).

⁹ See Regs. Sec. 1.1031(k)-1(g)(4).

¹⁰ See, e.g., Regs. Sec. 1.1031(k)-1(g)(4)(i); Rev. Proc. 2000-37, 2000-2 CB 308; IRS Letter Ruling 200118023 (5/7/01).

¹¹ Rev. Proc. 2000-37, 2000-2 CB 308.

¹² See Regs. Sec. 1.368-2.

¹³ See Notice 2005-91, 2005-2 CB 1164; IRS Letter Rulings 200303032 (10/8/02), 200008015 (11/18/99) and 9739014 (9/26/97).

¹⁴ See, e.g., Del. Code Ann., tit. 6, §18-801(a)(4).

¹⁵ Rev. Rul. 99-6, 1999-1 CB 432.

¹⁶ See id., Situation 1.

¹⁷ Rev. Rul. 99-5, 1999-1 CB 434.

¹⁸ See id., Situation 1.

¹⁹ See Regs. Sec. 1.752-2 and -3.

²⁰ Regs. Sec. 1.752-2(k) defines “net value” as “[t]he fair market value of all assets owned by the disregarded entity that may be subject to creditors’ claims under local law … less … [a]ll obligations of the disregarded entity that do not constitute [recourse] obligations of the disregarded entity.”

²¹ After May 25, 2007, spouses who file jointly can elect to have a joint venture in which they are the only partners not treated as a partnership for Federal tax purposes; see Sec. 761(f).

²² Rev. Proc. 2002-69, 2002-2 CB 831.

²³ IRS Letter Ruling 200201024 (10/5/01).

²⁴ See, generally, Sec. 704(b) and the regulations thereunder.

²⁵ See, e.g., Rev. Rul. 2004-51, 2004-22 IRB 973 (guidance on the extent of a charity’s permissible activities in a joint venture with a for-profit partner); see also Rev. Rul. 98-15, 1998-1 CB 718.

²⁶ See IRS Letter Ruling 200150027 (8/7/01).

²⁷ Texas imposes a franchise tax based on an LLC’s “earned surplus”; see Tex. Tax Code §§171.001 and 171.002. California imposes an annual tax of $800 on LLCs, plus a fee based on the entity’s annual total income; see Cal. Rev. & Tax. Code §§17941, 17942 and 23153.

²⁸ See, generally, Secs. 1401 and 3101.

²⁹ There are some exceptions to this “deferral privilege,” however, most notably income earned by a controlled foreign corporation that is considered subpart F income; see Sec. 864(c)(4).

³⁰ In re Ashley Albright, 291 BR 538 (Bank’r CO 2003).