LLC’s ARE TAXED AS A PARTNERSHIP

The federal income tax treatment of LLCs and limited partnerships are the same. However, the LLC has limited liability protection afforded all LLC members and managers. In a Limited Partnership the general partners are personally liable for partnership debts and obligations. The LLC provides limited liability protection to members regardless of the extent of their participation in management of the LLC’s business affairs.

If an LLC is structured to be classified as a partnership for federal income tax purposes, it may be permitted to allocate tax items of income, gains, deductions, losses, and credits among its members according to the guidelines set forth in its "operating agreement".

LLC’s ARE USFEL IN REAL ESTATE

The LLC is very useful in real estate transactions for several reasons. It provides limited liability.  It can be used to hold property anonymously. The management of real estate by an LLC is much easier and less formal than with a corporation. An LLC gives you charging order protection to protect your assets in the LLC. Passive income, such as capital gains, does not incur social security tax in an LLC.

HOW TO HOLD PROPERTY ANONYMOUSLY

You can hold real estate, vehicles, heavy equipment, medical equipment, planes and boats in the name of n LLC.  Many states require identification of all the members of the LLC. However, in Nevada and some other states, only a general manager needs to be identified. This person can be an independent party such as a trusted friend, relative, another LLC or a nominee (a professional person who holds the property for a fee). When using the LLC to hold title to property, it is not necessary to obtain an EIN number because you are not engaging in business. 

CHARGING ORDER PROTECTION:

A creditor’s remedy to collect is called a “charging order”. This allows the creditor to intercept your share of any distributions of capital profits, but the debtor also becomes liable for your share of LLC taxes The beauty of the charging order is that it does not give the creditor any management or member rights. So the creditor has no control over disbursements. You are allowed to take a salary, to joint venture, to borrow money from the limited liability company.  Meanwhile, the LLC manager may elect to never make a capital distribution.

LLCs ARE USEFUL FOR BUSINESSES

A very effective and useful Asset Protection vehicle for most businesses entails the use of a LLC. The specific arrangement would depend on your particular circumstances, business activity, and the type of assets owned. If you are engaged in any business or if you own property, we recommend that you take necessary steps to arrange your affairs in order to maximize the income tax, estate planning, wealth preservation and law suit protection techniques currently available.