Starting in 2009, a NY LLC that is treated as a disregarded entity for federal income tax purposes and that has any income, gain, loss, or deduction from New York sources is also subject to a new filing fee. The amount of the filing fee for an LLC that is treated as a disregarded entity for federal income tax purposes is $25.
The IRS has concluded that an individual retirement account may be designated as the tax matters partner under reg. section 301.6231(a)(7)-1(b)(2) and that the IRA would execute its tax matters partner role through its trustee.
An IRA is a trust (see I.R.C. 408) and its custodian is a trustee for purposes of federal law. Thus, it is a “person” as defined under I.R.C. 7701(a)(1) and a “United States Person” under I.R.C. 7701(a)(30)(E). Thus, an IRA may be designated as Tax Matters Partner under Treas. Reg. Section 301.6231(a)(7)-1(b)(2). It would execute its TMP function through its trustee. Even if the IRA was not a United States person, the restriction under the forgoing regulation applies only if there is a United States person who is eligible. Under your facts, there are no non-IRA partners, so the restriction in question (limiting designations to U.S. persons) does not apply in any event.
Adam Bergman, President of MyLLCAgreement.com, to serve as legal expert on www.youngentrepreneur.com.
Prior to launching MyLLCAgreement.com, Mr. Bergman worked as a corporate and tax attorney at White & Case LLP and Dewey LeBoeuf LLP, two of the most prominent corporate law firms in the United States where he advised thousands of entrepreneurs and business owners on a wide range of corporate and tax issues. Adam Bergman is recognized as a leading partnership tax expert and has lectured attorneys on the taxation of LLCs.
H.R. 4213, the Tax Extenders Act of 2009, passed on a 241-181 vote after a debate focused mainly on the bill’s offsets: higher taxes on carried interest income and a set of enforcement and information reporting measures targeting offshore tax havens. The bill contains a provision that would change the tax status of a “carried interest” from capital gains to ordinary income, with the purpose of paying for year-end tax extensions.
Impact on Members of an LLC Receiving a Carried Interest
H.R. 4213 would finally close the loophole for what investment fund managers and venture capitalists call “carried interest.”
In general, a middle-income person typically pays income taxes as high as 35 percent plus payroll taxes. Investment fund managers can receive millions of dollars in compensation for their work, but by calling this income “carried interest,” they pay only income taxes at a 15 percent rate.
The “carried interest” label essentially allows these fund managers to pretend that this income is a return on capital investments (and thus eligible for the exception in the income tax that subjects capital gains to an income tax rate of no more than 15 percent).
What all this means is that there is a good chance that investment fund managers and venture capitalists will soon be paying the ordinary income rate on carried interest instead of the capital gains rate.
Learn more about drafting an LLC Operating Agreement to include the grant of a “carried interest” at www.myllcagreement.com
National Registered Agents, Inc. (NRAI) and MyLLCAgreement.com announced today a strategic partnership designed to help new business owners protect themselves with access to the leading registered agent and LLC Operating Agreement services. The partnership combines NRAI’s deep knowledge and experience providing business owners with registered agent services along with MyLLCAgreement.com’s state of the art customized online LLC Operating Agreement application. This strategic partnership helps entrepreneurs address their number one objective – protecting their new business.
