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Personal Liability for Franchise Tax
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Stuart A. Bronstein
Dec 6, 2012, 7:51:40 PM12/6/12
to
This concerns liability for California Franchise tax -
People set up a California LLC, try to set up a business but it's a
flop - no income at all. So before the end of the first tax year
they decide to go out of business.
Technically they are required to pay the minimum franchise tax and
dissolve the LLC. But as far as I can tell there is no personal
liability for that tax (there would be for sales tax, though), so I
suggested just doing nothing and let the LLC be suspended.
The question, though, is about filing the final (or only ever) income
tax return. There is a thought that there might be some personal
liability (possibly even criminal) for failure to file the return.
What's the story? What am I missing.
Thanks.
___
Stu
http://DownToEarthLawyer.com
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
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<< ------------------------------------------------------- >>
People set up a California LLC, try to set up a business but it's a
flop - no income at all. So before the end of the first tax year
they decide to go out of business.
Technically they are required to pay the minimum franchise tax and
dissolve the LLC. But as far as I can tell there is no personal
liability for that tax (there would be for sales tax, though), so I
suggested just doing nothing and let the LLC be suspended.
The question, though, is about filing the final (or only ever) income
tax return. There is a thought that there might be some personal
liability (possibly even criminal) for failure to file the return.
What's the story? What am I missing.
Thanks.
___
Stu
http://DownToEarthLawyer.com
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Pico Rico
Dec 6, 2012, 10:27:20 PM12/6/12
to
"Stuart A. Bronstein" <spam...@lexregia.com> wrote in message
news:XnsA121AB7EF9A71s...@130.133.4.11...
> This concerns liability for California Franchise tax -
>
> People set up a California LLC, try to set up a business but it's a
> flop - no income at all. So before the end of the first tax year
> they decide to go out of business.
>
> Technically they are required to pay the minimum franchise tax and
> dissolve the LLC. But as far as I can tell there is no personal
> liability for that tax (there would be for sales tax, though), so I
> suggested just doing nothing and let the LLC be suspended.
>
> The question, though, is about filing the final (or only ever) income
> tax return. There is a thought that there might be some personal
> liability (possibly even criminal) for failure to file the return.
>
> What's the story? What am I missing.
>
What is the liability if no tax is due? What is the liability if there is
>
> People set up a California LLC, try to set up a business but it's a
> flop - no income at all. So before the end of the first tax year
> they decide to go out of business.
>
> Technically they are required to pay the minimum franchise tax and
> dissolve the LLC. But as far as I can tell there is no personal
> liability for that tax (there would be for sales tax, though), so I
> suggested just doing nothing and let the LLC be suspended.
>
> The question, though, is about filing the final (or only ever) income
> tax return. There is a thought that there might be some personal
> liability (possibly even criminal) for failure to file the return.
>
> What's the story? What am I missing.
>
tax due but the LLC has no funds (and the funds didn't end up in the owner's
hands)? I don't know, but it seems that if there is no liability in either
of these cases, there should be no personal liability.
Alan
Dec 7, 2012, 12:14:49 AM12/7/12
to
On 12/6/12 5:51 PM, Stuart A. Bronstein wrote:
> This concerns liability for California Franchise tax -
>
> People set up a California LLC, try to set up a business but it's a
> flop - no income at all. So before the end of the first tax year
> they decide to go out of business.
>
> Technically they are required to pay the minimum franchise tax and
> dissolve the LLC. But as far as I can tell there is no personal
> liability for that tax (there would be for sales tax, though), so I
> suggested just doing nothing and let the LLC be suspended.
>
> The question, though, is about filing the final (or only ever) income
> tax return. There is a thought that there might be some personal
> liability (possibly even criminal) for failure to file the return.
>
> What's the story? What am I missing.
>
> Thanks.
>
> ___
> Stu
> http://DownToEarthLawyer.com
>
I don't think you are missing anything if the owners filed the election
> This concerns liability for California Franchise tax -
>
> People set up a California LLC, try to set up a business but it's a
> flop - no income at all. So before the end of the first tax year
> they decide to go out of business.
>
> Technically they are required to pay the minimum franchise tax and
> dissolve the LLC. But as far as I can tell there is no personal
> liability for that tax (there would be for sales tax, though), so I
> suggested just doing nothing and let the LLC be suspended.
>
> The question, though, is about filing the final (or only ever) income
> tax return. There is a thought that there might be some personal
> liability (possibly even criminal) for failure to file the return.
>
> What's the story? What am I missing.
>
> Thanks.
>
> ___
> Stu
> http://DownToEarthLawyer.com
>
to treat the LLC as a corporation. Otherwise, there is personal
liability to pay the $800 tax. There is also failure to file and failure
to pay penalties. Until the LLC is cancelled, another $800 per year will
accrue with failure to file/pay penalties.
--
Alan
http://taxtopics.net
Stuart A. Bronstein
Dec 7, 2012, 2:59:03 AM12/7/12
to
>> This concerns liability for California Franchise tax -
>>
>> People set up a California LLC, try to set up a business but
>> it's a flop - no income at all. So before the end of the first
>> tax year they decide to go out of business.
>>
>> Technically they are required to pay the minimum franchise tax
>> and dissolve the LLC. But as far as I can tell there is no
>> personal liability for that tax (there would be for sales tax,
>> though), so I suggested just doing nothing and let the LLC be
>> suspended.
>>
>> The question, though, is about filing the final (or only ever)
>> income tax return. There is a thought that there might be some
>> personal liability (possibly even criminal) for failure to file
>> the return.
>
>>
>> People set up a California LLC, try to set up a business but
>> it's a flop - no income at all. So before the end of the first
>> tax year they decide to go out of business.
>>
>> Technically they are required to pay the minimum franchise tax
>> and dissolve the LLC. But as far as I can tell there is no
>> personal liability for that tax (there would be for sales tax,
>> though), so I suggested just doing nothing and let the LLC be
>> suspended.
>>
>> The question, though, is about filing the final (or only ever)
>> income tax return. There is a thought that there might be some
>> personal liability (possibly even criminal) for failure to file
>> the return.
>
> What is the liability if no tax is due?
There's apparently a penalty of a couple of hundred dollars for
each LLC member, even if there is no tax due. So the question is
whether that means the members themselves can be liable for the
tax. My guess is that they can't, that there's no personal
liability except for sales and withholding taxes.
The other issue is whether failure to file a return at all when
there is no tax due could lead to criminal penalties for the
members.
> What is the liability
> if there is tax due but the LLC has no funds (and the funds
> didn't end up in the owner's hands)?
they can be forced to give back what they got. But in this case
they got nothing.
> I don't know, but it seems
> that if there is no liability in either of these cases, there
> should be no personal liability.
will have no personal liability for debts of the organization. But
the client is worred, so I want to make sure I'm not missing
anything.
___
Stu
http://DownToEarthLawyer.com
Stuart A. Bronstein
Dec 7, 2012, 3:01:44 AM12/7/12
to
Alan <temp...@vacationmail.com> wrote:
> I don't think you are missing anything if the owners filed the
> election to treat the LLC as a corporation. Otherwise, there is
> personal liability to pay the $800 tax.
So the members will have personal liability if they did not take the
> I don't think you are missing anything if the owners filed the
> election to treat the LLC as a corporation. Otherwise, there is
> personal liability to pay the $800 tax.
election, even though they have no personal liability for any other
debts of the LLC? Ok, thanks.
> There is also failure to file and failure to pay penalties. Until
> the LLC is cancelled, another $800 per year will accrue with
> failure to file/pay penalties.
and no personal liability if they did?
Thanks, Alan. I appreciate the information.
___
Stu
http://DownToEarthLawyer.com
Alan
Dec 7, 2012, 9:57:08 AM12/7/12
to
On 12/7/12 1:01 AM, Stuart A. Bronstein wrote:
> Alan <temp...@vacationmail.com> wrote:
>
>> I don't think you are missing anything if the owners filed the
>> election to treat the LLC as a corporation. Otherwise, there is
>> personal liability to pay the $800 tax.
>
> So the members will have personal liability if they did not take the
> election, even though they have no personal liability for any other
> debts of the LLC? Ok, thanks.
>
>> There is also failure to file and failure to pay penalties. Until
>> the LLC is cancelled, another $800 per year will accrue with
>> failure to file/pay penalties.
>
> Is that the same, personal liability if they didn't file the election
> and no personal liability if they did?
>
> Thanks, Alan. I appreciate the information.
>
> ___
> Stu
> http://DownToEarthLawyer.com
>
If not a corporation, it is a pass-through entity. As such, the tax &
> Alan <temp...@vacationmail.com> wrote:
>
>> I don't think you are missing anything if the owners filed the
>> election to treat the LLC as a corporation. Otherwise, there is
>> personal liability to pay the $800 tax.
>
> So the members will have personal liability if they did not take the
> election, even though they have no personal liability for any other
> debts of the LLC? Ok, thanks.
>
>> There is also failure to file and failure to pay penalties. Until
>> the LLC is cancelled, another $800 per year will accrue with
>> failure to file/pay penalties.
>
> Is that the same, personal liability if they didn't file the election
> and no personal liability if they did?
>
> Thanks, Alan. I appreciate the information.
>
> ___
> Stu
> http://DownToEarthLawyer.com
>
penalty due passes to the members.
--
Alan
http://taxtopics.net
Pico Rico
Dec 7, 2012, 10:36:04 AM12/7/12
to
"Stuart A. Bronstein" <spam...@lexregia.com> wrote in message
news:XnsA12245220ADsp...@130.133.4.11...
> Alan <temp...@vacationmail.com> wrote:
>
>> I don't think you are missing anything if the owners filed the
>> election to treat the LLC as a corporation. Otherwise, there is
>> personal liability to pay the $800 tax.
>
> So the members will have personal liability if they did not take the
> election, even though they have no personal liability for any other
> debts of the LLC? Ok, thanks.
>
>> There is also failure to file and failure to pay penalties. Until
>> the LLC is cancelled, another $800 per year will accrue with
>> failure to file/pay penalties.
>
> Is that the same, personal liability if they didn't file the election
> and no personal liability if they did?
>
> Thanks, Alan. I appreciate the information.
>
I also appreciate the information, but note that there is no support given
>
>> I don't think you are missing anything if the owners filed the
>> election to treat the LLC as a corporation. Otherwise, there is
>> personal liability to pay the $800 tax.
>
> So the members will have personal liability if they did not take the
> election, even though they have no personal liability for any other
> debts of the LLC? Ok, thanks.
>
>> There is also failure to file and failure to pay penalties. Until
>> the LLC is cancelled, another $800 per year will accrue with
>> failure to file/pay penalties.
>
> Is that the same, personal liability if they didn't file the election
> and no personal liability if they did?
>
> Thanks, Alan. I appreciate the information.
>
for Alan's comments. Treating the LLC as a corporation is NOT about
liability protection, it is about how the income will be taxed.
Alan
Dec 7, 2012, 12:01:28 PM12/7/12
to
On 12/7/12 8:36 AM, Pico Rico wrote:
> "Stuart A. Bronstein" <spam...@lexregia.com> wrote in message
> news:XnsA12245220ADsp...@130.133.4.11...
>> Alan <temp...@vacationmail.com> wrote:
>>
>>> I don't think you are missing anything if the owners filed the
>>> election to treat the LLC as a corporation. Otherwise, there is
>>> personal liability to pay the $800 tax.
>>
>> So the members will have personal liability if they did not take the
>> election, even though they have no personal liability for any other
>> debts of the LLC? Ok, thanks.
>>
>>> There is also failure to file and failure to pay penalties. Until
>>> the LLC is cancelled, another $800 per year will accrue with
>>> failure to file/pay penalties.
>>
>> Is that the same, personal liability if they didn't file the election
>> and no personal liability if they did?
>>
>> Thanks, Alan. I appreciate the information.
>>
>
> I also appreciate the information, but note that there is no support given
> for Alan's comments. Treating the LLC as a corporation is NOT about
> liability protection, it is about how the income will be taxed.
>
It is my understanding that an LLC that has designated itself as a
> "Stuart A. Bronstein" <spam...@lexregia.com> wrote in message
> news:XnsA12245220ADsp...@130.133.4.11...
>> Alan <temp...@vacationmail.com> wrote:
>>
>>> I don't think you are missing anything if the owners filed the
>>> election to treat the LLC as a corporation. Otherwise, there is
>>> personal liability to pay the $800 tax.
>>
>> So the members will have personal liability if they did not take the
>> election, even though they have no personal liability for any other
>> debts of the LLC? Ok, thanks.
>>
>>> There is also failure to file and failure to pay penalties. Until
>>> the LLC is cancelled, another $800 per year will accrue with
>>> failure to file/pay penalties.
>>
>> Is that the same, personal liability if they didn't file the election
>> and no personal liability if they did?
>>
>> Thanks, Alan. I appreciate the information.
>>
>
> I also appreciate the information, but note that there is no support given
> for Alan's comments. Treating the LLC as a corporation is NOT about
> liability protection, it is about how the income will be taxed.
>
corporation is treated as a corporation for delinquent taxes and
assessments. Therefore, unless the LLC distributed its profits as
dividends, wages or return of capital to the members, there is no
recourse for collection of back taxes and penalties from the members.
Stuart said there was never any income. I conclude that the members have
no personal liability for the franchise tax and its accruing penalties.
--
Alan
http://taxtopics.net
Stuart A. Bronstein
Dec 7, 2012, 12:42:11 PM12/7/12
to
Alan <temp...@vacationmail.com> wrote:
>> I also appreciate the information, but note that there is no
>> support given for Alan's comments. Treating the LLC as a
>> corporation is NOT about liability protection, it is about how
>> the income will be taxed.
>>
> It is my understanding that an LLC that has designated itself as
> a corporation is treated as a corporation for delinquent taxes
> and assessments. Therefore, unless the LLC distributed its
> profits as dividends, wages or return of capital to the members,
> there is no recourse for collection of back taxes and penalties
> from the members. Stuart said there was never any income. I
> conclude that the members have no personal liability for the
> franchise tax and its accruing penalties.
LLC's were created because of the dissatisfaction with limited
>> I also appreciate the information, but note that there is no
>> support given for Alan's comments. Treating the LLC as a
>> corporation is NOT about liability protection, it is about how
>> the income will be taxed.
>>
> It is my understanding that an LLC that has designated itself as
> a corporation is treated as a corporation for delinquent taxes
> and assessments. Therefore, unless the LLC distributed its
> profits as dividends, wages or return of capital to the members,
> there is no recourse for collection of back taxes and penalties
> from the members. Stuart said there was never any income. I
> conclude that the members have no personal liability for the
> franchise tax and its accruing penalties.
partnerships, where at least one solvent person was required to be
personally liable for the organization's debts. People had tried
to avoid that by having, for example, a corporation be the general
partner. When the corporations didn't have sufficient assets, the
IRS would come in and tax the partnership as a corporation anyway.
The LLC was created to avoid the problem. Each state created an
LLC law, and had it approved by the IRS so that anyone complying
with the law could be taxed as a partnership even though there was
no one with personal liability. The IRS just threw up its hands at
that point and let LLC's pick how they were to be taxed. There is
no law, as far as I am aware, that provides that - it was done by
regulation only because the IRS didn't want to deal with the issue
anymore.
While it would certainly be legal for the legislature to require
LLC members to be personally responsible for some LLC taxes (i.e.
sales and withholding taxes), I am not aware that they have done
so.
If you look at R&T Code §17941 et seq., the statutes that impose
the tax on LLC's that are not taxed as corporations, the tax is
imposed only on the LLC. There is no hint that any liability is
imposed on members.
___
Stu
http://DownToEarthLawyer.com
Alan
Dec 7, 2012, 2:26:32 PM12/7/12
to
deals with imposition and calculation. It has nothing to do with
collection, penalties or liability. E.g., Part 10 says that CA will
impose an income tax on individuals, a tax on LLCs, a tax on
Partnerships, etc. It doesn't say how the tax is administered nor how it
is collected nor who is liable for failure to file or pay. For that, you
have to look to other parts of the R&T code and court cases.
It's been a very long time since I've been involved with CA taxation. I
have no citations for you. I thought that CA would be no different than
other states that pass-through liability for taxes from an entity to a
responsible individual when the taxes are not paid.
--
Alan
http://taxtopics.net
Bill Brown
Dec 7, 2012, 10:24:13 PM12/7/12
to
federal tax election had anything to do with who was or was not liable
under California law for this particular fee.
removeps-groups
Dec 11, 2012, 9:27:26 PM12/11/12
to
"Alan" <temp...@vacationmail.com> wrote in message
news:k9t03v$eui$1...@dont-email.me...
>>> I don't think you are missing anything if the owners filed the
>>> election to treat the LLC as a corporation. Otherwise, there is
>>> personal liability to pay the $800 tax.
then the members will still be responsible for paying the $800 minimum tax
plus other penalties. It's only if it were a C corporation then it is free.
news:k9t03v$eui$1...@dont-email.me...
>>> I don't think you are missing anything if the owners filed the
>>> election to treat the LLC as a corporation. Otherwise, there is
>>> personal liability to pay the $800 tax.
> If not a corporation, it is a pass-through entity. As such, the tax &
> penalty due passes to the members.
So that means that if an election was made to tax it as an S corporation
> penalty due passes to the members.
then the members will still be responsible for paying the $800 minimum tax
plus other penalties. It's only if it were a C corporation then it is free.
Pico Rico
Dec 11, 2012, 10:37:57 PM12/11/12
to
"removeps-groups" <removep...@yahoo.com> wrote in message
news:ka8q1i$lel$1...@speranza.aioe.org...
> "Alan" <temp...@vacationmail.com> wrote in message
> news:k9t03v$eui$1...@dont-email.me...
>
>>>> I don't think you are missing anything if the owners filed the
>>>> election to treat the LLC as a corporation. Otherwise, there is
>>>> personal liability to pay the $800 tax.
>
>> If not a corporation, it is a pass-through entity. As such, the tax &
>> penalty due passes to the members.
>
> So that means that if an election was made to tax it as an S corporation
> then the members will still be responsible for paying the $800 minimum tax
> plus other penalties. It's only if it were a C corporation then it is
> free.
I believe that theory has been debunked.
> news:k9t03v$eui$1...@dont-email.me...
>
>>>> I don't think you are missing anything if the owners filed the
>>>> election to treat the LLC as a corporation. Otherwise, there is
>>>> personal liability to pay the $800 tax.
>
>> If not a corporation, it is a pass-through entity. As such, the tax &
>> penalty due passes to the members.
>
> So that means that if an election was made to tax it as an S corporation
> then the members will still be responsible for paying the $800 minimum tax
> plus other penalties. It's only if it were a C corporation then it is
> free.
Stuart A. Bronstein
Dec 11, 2012, 11:09:18 PM12/11/12
to
"Pico Rico" <Pico...@nonospam.com> wrote:
> "removeps-groups" <removep...@yahoo.com> wrote
>> "Alan" <temp...@vacationmail.com> wrote
has been given by anyone.
___
Stu
http://DownToEarthLawyer.com
> "removeps-groups" <removep...@yahoo.com> wrote
>> "Alan" <temp...@vacationmail.com> wrote
>>
>>> If not a corporation, it is a pass-through entity. As such,
>>> the tax & penalty due passes to the members.
>>
>> So that means that if an election was made to tax it as an S
>> corporation then the members will still be responsible for
>> paying the $800 minimum tax plus other penalties. It's only if
>> it were a C corporation then it is free.
>
> I believe that theory has been debunked.
No, you merely disagreed with it. No authority for either position
>>> If not a corporation, it is a pass-through entity. As such,
>>> the tax & penalty due passes to the members.
>>
>> So that means that if an election was made to tax it as an S
>> corporation then the members will still be responsible for
>> paying the $800 minimum tax plus other penalties. It's only if
>> it were a C corporation then it is free.
>
> I believe that theory has been debunked.
has been given by anyone.
___
Stu
http://DownToEarthLawyer.com
Pico Rico
Dec 12, 2012, 2:55:35 AM12/12/12
to
news:XnsA126CCF9E55B9s...@130.133.4.11...
pointed out, and no contrary authority was provided.
> "Pico Rico" <Pico...@nonospam.com> wrote:
>> "removeps-groups" <removep...@yahoo.com> wrote
>>> "Alan" <temp...@vacationmail.com> wrote
>>>
>>>> If not a corporation, it is a pass-through entity. As such,
>>>> the tax & penalty due passes to the members.
>>>
>>> So that means that if an election was made to tax it as an S
>>> corporation then the members will still be responsible for
>>> paying the $800 minimum tax plus other penalties. It's only if
>>> it were a C corporation then it is free.
>>
>> I believe that theory has been debunked.
>
> No, you merely disagreed with it. No authority for either position
> has been given by anyone.
>
The well known limited liability of "LIMITED LIABILITY companies" was
>> "removeps-groups" <removep...@yahoo.com> wrote
>>> "Alan" <temp...@vacationmail.com> wrote
>>>
>>>> If not a corporation, it is a pass-through entity. As such,
>>>> the tax & penalty due passes to the members.
>>>
>>> So that means that if an election was made to tax it as an S
>>> corporation then the members will still be responsible for
>>> paying the $800 minimum tax plus other penalties. It's only if
>>> it were a C corporation then it is free.
>>
>> I believe that theory has been debunked.
>
> No, you merely disagreed with it. No authority for either position
> has been given by anyone.
>
pointed out, and no contrary authority was provided.
Stuart A. Bronstein
Dec 12, 2012, 10:15:18 AM12/12/12
to
>> "Pico Rico" <Pico...@nonospam.com> wrote:
>>> "removeps-groups" <removep...@yahoo.com> wrote
>>>> "Alan" <temp...@vacationmail.com> wrote
>>>>
>>>>> If not a corporation, it is a pass-through entity. As such,
>>>>> the tax & penalty due passes to the members.
>>>>
>>>> So that means that if an election was made to tax it as an S
>>>> corporation then the members will still be responsible for
>>>> paying the $800 minimum tax plus other penalties. It's only
>>>> if it were a C corporation then it is free.
>>>
>>> I believe that theory has been debunked.
>>
>> No, you merely disagreed with it. No authority for either
>> position has been given by anyone.
>
> The well known limited liability of "LIMITED LIABILITY
> companies" was pointed out, and no contrary authority was
> provided.
Platitudes don't apply in the law. The statute legislatures are
>>> "removeps-groups" <removep...@yahoo.com> wrote
>>>> "Alan" <temp...@vacationmail.com> wrote
>>>>
>>>>> If not a corporation, it is a pass-through entity. As such,
>>>>> the tax & penalty due passes to the members.
>>>>
>>>> So that means that if an election was made to tax it as an S
>>>> corporation then the members will still be responsible for
>>>> paying the $800 minimum tax plus other penalties. It's only
>>>> if it were a C corporation then it is free.
>>>
>>> I believe that theory has been debunked.
>>
>> No, you merely disagreed with it. No authority for either
>> position has been given by anyone.
>
> The well known limited liability of "LIMITED LIABILITY
> companies" was pointed out, and no contrary authority was
> provided.
permitted to do pretty much what they want in terms of imposing
liability on corporations and LLC's. They normally don't. But
just saying so doesn't mean that limited liability applies in any
particular case.
Just for the record, I agree with you on the way the law should be.
But how it is? I'm still waiting for real authority.
___
Stu
http://DownToEarthLawyer.com
Alan
Dec 12, 2012, 11:46:42 AM12/12/12
to
Corporate Code. Section 17101(a) says that a member has no liability
solely because they are a member. 17101(b) provides liability under
common law governing alter ego liability in the same manner as it
relates to a shareholder of a corporation. Therefore, for an LLC
operating as a partnership, you look to the law that relates to the
liability of corporate shareholders. 17101(e) provides liability if the
articles of organization or a written operating agreement specifically
referring to this section makes makes them liable.
There is a case that appears to have direct bearing on liability by the
members: Ralite Lamp Corporation. I didn't have access to the case but
there is an explanation of it at
http://www.avvo.com/legal-guides/ugc/shareholder-liability-for-minimum-corporate-franchise-tax-in-california
(Shareholder Liability for Minimum Corporate Corporate Franchise Tax
in California).
Basically, it says that shareholders are not liable unless they
expressly assume liability or they are liable in equity under the law of
fraudulent conveyances.
So.... Based on the set of facts you presented, I conclude that a
partner member of an LLC or a corporate shareholder of an LLC would not
be liable for the $800 fee.
--
Alan
http://taxtopics.net
Stuart A. Bronstein
Dec 12, 2012, 12:55:40 PM12/12/12
to
pass the information on.
___
Stu
http://DownToEarthLawyer.com
Pico Rico
Dec 12, 2012, 5:20:23 PM12/12/12
to
news:kaacda$4hr$1...@dont-email.me...
That is very useful. But I don't understand your statement "for an LLC
operating as a partnership". LLCs operate as, well, LLCs. I agree their
operating agreement could be controlling, just as some sort of shareholder
agreement in a corporation.
operating as a partnership". LLCs operate as, well, LLCs. I agree their
operating agreement could be controlling, just as some sort of shareholder
agreement in a corporation.
Alan
Dec 12, 2012, 6:55:30 PM12/12/12
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proprietorship. A multi-member LLC is a partnership for tax purposes
unless an election is made to be treated as a corporation for tax purposes.
--
Alan
http://taxtopics.net
Pico Rico
Dec 13, 2012, 12:17:28 AM12/13/12
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news:kab5h5$dg3$1...@dont-email.me...
I hope you are merely being sloppy with your words here. In California, a
single member LLC is NOT disregarded - it is a valid LLC and affords limited
liability protection to its single member. It is disregarded for tax
purposes only. Likewise, an LLC with multiple members does not "operate as
a partnership", it operates as a multi member LLC. It may be TAXED as
either a partnership or a corporation. This sort of confusion may have been
what led to some comment up thread that an LLC taxed as a partnership
resulted in its members being personally liable for LLC taxes.
single member LLC is NOT disregarded - it is a valid LLC and affords limited
liability protection to its single member. It is disregarded for tax
purposes only. Likewise, an LLC with multiple members does not "operate as
a partnership", it operates as a multi member LLC. It may be TAXED as
either a partnership or a corporation. This sort of confusion may have been
what led to some comment up thread that an LLC taxed as a partnership
resulted in its members being personally liable for LLC taxes.
Alan
Dec 13, 2012, 12:43:09 PM12/13/12
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liability. My post used the term "for tax purposes" three times. We are
discussing how member(s) of an LLC are treated for tax purposes. Each
state can set its own rules for members of LLCs. This discussion
involved tax liability in the state of CA. That required researching CA
law on alter ego liability as it related to members of an LLC. The
research revealed that the liability for the specific tax identified in
the OP does not pass through to the members of an LLC treated as a
partnership or a corporation except under certain circumstances that
were not present in the set of facts in the OP.
--
Alan
http://taxtopics.net
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