Discussion:Federal filing requirements for Series LLC

Thanks,

Bob

805 ILCS 180/37-40 Series of members, managers or limited liability company interests. (b)...A series with limited liability shall be treated as a separate entity to the extent set forth in the articles of organization. Each series with limited liability may, in its own name, contract, hold title to assets, grant security interests, sue and be sued and otherwise conduct business and exercise the powers of a limited liability company under this Act. The limited liability company and any of its series may elect to consolidate their operations as a single taxpayer to the extent permitted under applicable law, elect to work cooperatively, elect to contract jointly or elect to be treated as a single business for purposes of qualification to do business in this or any other state.

If you would like more info, I'll link you to him. I'm still a newbie on this forum, so I don't know if it's ok to post info on him.

Thank you both for your helpful comments.

The substance of the article for this discussion is that there are no guidelines. My guess is that if you have common ownership of the LLCs, you are probably safe. If you have a mix of ownership, and if you consolidate the reporting, it's possible IRS could say that you failed to file a partnership return. The real answer is that nobody knows.

An additional article highlights that. The article is more than 1½ years old, and IRS is still thinking about it.

NEWS-FEDERAL, 2006TAXDAY, (Nov. 09, 2006), Item #M.2, Practitioner Touts Delaware Series LLCs

Howard Levine of Roberts & Holland LLP told practitioners at a November 8 D.C. Bar program that a Delaware series limited liability company (LLC) can be a "terrific vehicle" for owning multiple parcels of rental real estate, each series or entity having its own limited liability. This technique can be used to segregate assets into different entities. The result is similar to having a master limited partnership with partners who are single-member LLCs. Levine and program moderator Blake Rubin of Arnold & Porter LLP agreed that the two approaches are economically similar.

Levine submitted a ruling request to the IRS on a Delaware series LLC, suggesting that a series LLC could work like a master limited partnership and could specially allocate profits and losses. The IRS turned the ruling request into a project but has not made any progress on it, indicated James Quinn, IRS Senior Counsel (Passthroughs and Special Industries).

The only state I know of that has ruled on this is California. California will treat the series as a single LLC, subject to one $800 minimum tax (and fee), UNLESS both of the following apply:

· The holders of the interest in each series are limited to the assets of that series on redemption, liquidation, or termination, and may share in the income only of that series, and

· Under state law, the payment of the expenses, charges, and obligations of the series is limited to the assets only of that series.

Most series LLCs would probably meet both of those conditions, and each series that is doing business in California would be required to file its own Form 568 and pay the minimum tax and fee. See FTB Publication 3556, rev. 3-2007, p. 8.

States that do not impose an entity-level tax on LLCs will probably allow a series LLC to file a single return. However, if you have some series in the group that are doing business in the state and some not, and the state does impose an entity-level tax, you're probably going to want to file returns only for the in-state series.