Discussion:Member or Partnership Interest
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Discussion Forum Index --> Advanced Tax Questions --> Member or Partnership Interest
Discussion Forum Index --> Tax Questions --> Member or Partnership Interest
Accountingrx (talk|edits) said: | 31 January 2008 |
| Greetings: I have a LLC client taxed as a partnerhsip that wants to add a second membership class and allocate the profits and losses to this second class just from one segment of the business. I told him he could indeed do this provided the allocation has economic substance. It appears that it does. However, he now tells me that this second membership class will have NO OWNERSHIP EQUITY in the LLC. Only the first class members with have equity, and their equity will add up to 100%I am now stumped. How can a "member" share in the profits and lossess, have basis, but no equity. In other words, at the winding up of the LLC these second class members get nothing. Is this permissible???? | |
RoyDaleOne (talk|edits) said: | 31 January 2008 |
| Called a profits only member. Operating agreement can provide
for this situation. Share in losses? Why would the equity partner want this? | |
| January 31, 2008 | |
| The beauty of partnership tax law is that this stuff is perfectly fine. No one really knows how to account for it, but it's perfectly fine.... | |
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