Law Commons^™

Exculpatory Liabilities And Partnership Nonrecourse Allocations, Karen C. Burke

Karen Burke

The rise of limited liability companies (LLCs) classified as partnerships for federal income tax purposes challenges traditional assumptions concerning the treatment of recourse and nonrecourse liabilities under Subchapter K. The complex rules of sections 704(b) and 752 give little attention to liabilities that are recourse to the entity under section 1001 but for which no member bears the economic risk of loss under section 752. In comparison to traditional general or limited partnerships, however, LLCs are much more likely to incur such "exculpatory" liabilities because of the limited liability shield under state law. Although exculpatory liabilities are functionally quite similar …

Better Late Than Never: Incorporating Llcs Into Section 4943, Elaine Waterhouse Wilson

Akron Law Review

Part I of this Article traces the historical development of Code Section 4943 and the business entanglement issues that the Code Section was designed to combat. It then discusses developments in the law that occurred after the passage of Section 4943 that have implications for its structure, most importantly the introduction of the LLC. Part II describes the current statutory scheme of Section 4943, and the ambiguity in the manner in which it applies, and the practical problems and abuses that potentially arise from this ambiguity. In Part III, the Article reviews various options for clarifying the treatment of Section …

The New York Limited Liability Company Law At Twenty: Past, Present & Future, Meredith R. Miller

Meredith R. Miller

The New York Limited Liability Company Law (“LLC Law”) has turned 20. This occasion presents an opportunity to reflect on its past, present and future.

Now You See It, Now You Don’T: The Comings And Goings Of Disregarded Entities, Martin J. Mcmahon Jr.

Martin J. McMahon

While state law recognizes an LLC as a distinct type of entity, an LLC is not a distinct entity for federal tax purposes. An LLC that has two or more owners is treated as either a corporation or a partnership, while an LLC with a single owner will be disregarded for federal income tax purposes unless it elects to be treated as a corporation. In addition to single-member LLCs, the Code and Regulations recognize a second type of disregarded entity – the qualified subchapter S subsidiary (commonly called a QSub). The first part of this Article examines the tax consequences …

Exculpatory Liabilities And Partnership Nonrecourse Allocations, Karen C. Burke

Karen Burke

The rise of limited liability companies (LLCs) classified as partnerships for federal income tax purposes challenges traditional assumptions concerning the treatment of recourse and nonrecourse liabilities under Subchapter K. The complex rules of sections 704(b) and 752 give little attention to liabilities that are recourse to the entity under section 1001 but for which no member bears the economic risk of loss under section 752. In comparison to traditional general or limited partnerships, however, LLCs are much more likely to incur such "exculpatory" liabilities because of the limited liability shield under state law. Although exculpatory liabilities are functionally quite similar …

Achieving The Purpose Of Federal Diversity Jurisdiction: Why Courts Should Abandon The Current Treatment Of Llcs Under Section 1332, Kristen Curley

Touro Law Review

No abstract provided.

A Look At The Publication Requirement In New York Limited Liability Company Law, Matthew J. Moisan

Touro Law Review

No abstract provided.

The Ties That Bind: Llc Operating Agreements As Binding Commitments, Joan Macleod Heminway

Scholarly Works

This essay, written in honor and memory of Professor Alan R. Bromberg as part of a symposium issue of the Southern Methodist University Law Review, is designed to provide preliminary answers to two questions. First: is a limited liability company (“LLC”) operating agreement (now known under Delaware law and in certain other circles as a limited liability company agreement) a contract? And second: should we care either way? These questions arise out of, among other things, a recent bankruptcy court case, In re Denman, 513 B.R. 720, 725 (Bankr. W.D. Tenn. 2014).

The bottom line? An operating agreement may or …

Papa's Brand New Bag: The Need For Irs Recognition Of An Independent Nonprofit Limited Liability Company (Nllc), Kenya Jh Smith

Marquette Law Review

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Oppress Me No More: Amending The Illinois Llc Act To Provide Additional Remedies For Oppressed Minority Members, Paul T. Geske

Chicago-Kent Law Review

The limited liability company (LLC) has become the preeminent choice of entity for small and midsize businesses, but it suffers from some of the same problems as its older cousins, the close corporation and the partnership. One such problem is oppressive conduct directed at the minority in interest. This article examines claims of oppression brought by members of limited liability companies, with a special focus on the Illinois Limited Liability Company Act (ILLCA). The ILLCA only provides one remedy for oppression—dissolution and wind-up of the LLC. This sole remedy may be inadequate, given that courts have historically been reluctant to …

Series Of Unincorporated Business Entities: The Mobius Strip And Klein Bottle Of Business Entity Law, Daniel S. Kleinberger

Faculty Scholarship

Back in the day – say, 1990 – limited liability companies (LLCs) were the cutting edge of business entity law. Today, LLCs dominate entity formation, and the cutting edge has moved further out – to the notion of a “series,” a quasi-separate, quasi-person existing within an LLC.

Business lawyers are generally familiar with series of stocks and bonds, but those series have nothing to do with the LLC series discussed in this article. To avoid confusion, this article refers to protected series, which, as we will see, are the Mobius strips or Klein bottles of entity law.

Piercing The Fiduciary Veil, Colin P. Marks

Faculty Articles

Limited partnerships (LPs) and limited liability companies (LLCs) permit formation with a unique management structure in that these entities may be managed by another limited liability entity, such as a corporation. Thus, the true managers are those individuals who manage the manager. It is well settled that the managing entity, such as a corporate general partner, owes default fiduciary duties, but what of these second-tier managers? Technically, it is the managing entity that owes the duties, not the managing entity’s owners, officers, and directors, yet courts have struggled with strict adherence to this separation when it would seem inequitable to …

The New York Limited Liability Company Law At Twenty: Past, Present & Future, Meredith R. Miller

Touro Law Review

The New York Limited Liability Company Law (“LLC Law”) has turned 20. This occasion presents an opportunity to reflect on its past, present and future.

Reflections On Teaching Business Associations: The Case For Teaching More Agency And Unincorporated Business Entity Law, Mark J. Loewenstein

Publications

This paper argues for increased coverage of the law of agency and alternative entities in business associations courses.

The New York Llc Act At Twenty: Is Piercing Still 'Enveloped In The Midst Of Metaphor'?, Miriam R. Albert

Hofstra Law Faculty Scholarship

Twenty years ago, the New York Limited Liability Company Law was enacted, including § 609(a), which explicitly disclaims liability of members, managers, and agents for the debts and obligations of the LLC. However, New York courts have held that this limitation on liability is not absolute, and certain conduct on the part of the owners can erode the liability shield. The statute provides that the members will not have personal liability for LLC debts solely because of their role as owners in the LLC. The statute does not say that members will never have liability, just that any liability will …