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LLC Forms & Answers

Model operating agreements and articles, tax considerations, forum comparisons, conversion procedures, and solutions to common operating problems

hether used for business, tax, asset protection, or estate planning reasons, the versatility and simplicity of LLCs make them a popular choice. Now you can efficiently form LLCs custom-tailored to a variety of purposes, and provide quick answers to a wide range of client LLC questions, with Philip Jelsma and Pamela Nollkamper's The Limited Liability Company.

Practical advice, reproducible forms, tax and securities considerations, state-by-state analysis, and more.


Loaded with Helpful Drafting Tools

A free CD contains 300 time-tested forms to help you efficiently form and counsel LLCs: 23 completed articles of organization. Section 5.42 Checklists of opt-iin provisions for both articles of organization and operating agreements. Sections 5.41, 6.20 8 model operating agreements, with drafting outline. Section 6.30 Drafting outline for custom operating agreements. Section 6.40 Conversions from existing entities. Section 8.40 2 buy-sell agreements. Section 8.75 s Model interrogatories for suits against LLCs. Section 11.20

State-Specific Forms, Law, Directories and Charts

The Limited Liability Company provides complete materials for every state ­ a synopsis of statutory requirements and forms: Content required in articles of organization and operatIRS Revenue and letter rulings ing agreements Names, addresses, phone numbers, and web sites of Name reservation, filing and other formation procegoverning state agencies dures and fees A complete set of forms and source material Statutory requirements, including default rules, capital Reporting requirements contributions, profit-sharing, professional LLCs, and Required forms record-keeping

See inside for complete list of forms, table of contents, sample pages, author bio, and more...

About the Authors

Phillip L. Jelsma is a partner in the San Diego law firm of Luce, Forward, Hamilton & Scripps LLP where he specializes in tax law, with an emphasis on small business and international tax planning.

Mr. Jelsma is the former Chair of the California State Bar Real Estate and Passthrough Committee and the former member of Executive Committee of the Taxation Section of the California Bar. Mr. Jelsma was a member of the Drafting Committee for California's Limited Liability Company Act (SB 469) and testified on the Act in both the Senate and the Assembly. He has also drafted portions of the subsequent LLC clean-up bills, SB 13, SB 141, SB 1234, AB 1828 and AB 1970, as well as the California Revised Uniform Partnership Act. He has authored a portfolio book on the State Taxation of LLCs and LLPs for Tax Management. Mr. Jelsma is the past Chair of the Partnerships and Limited Liability Companies Committee of the Business Law Section of the State Bar of California. He assisted in the drafting of the new Revised Uniform Limited Partnership Act. He is currently a member of the National Conference of Commissioners on Uniform State Laws ("NCCUSL") drafting committee on a new Uniform Limited Liability Company Act and Uniform Business Trust Act. He is a member of the ABA's Business Law Committee on Partnership and Unincorporated Business Organizations. Mr. Jelsma graduated from Stanford Law School in 1986 and from the University of Southern California in 1979. He worked for the IRS and Arthur Young, and is a CPA in California.

Speeds Formation Tasks

Drafting checklists and digitized forms allow you to quickly create customized formation documents. For example, the free CD includes 23 completed articles of organization for a wide variety of purposes, including: a flexible approach, bullet-proof, modified bullet-proof, family LLC, office building, real estate, ranch/farm, professional LLC, liquor license, international, employment creation, treaty trader, and family company. Numerous alternative article provisions are also provided: management, committees, transfers, members, voting, notice, operating, arbitration, merger, share exchange, consolidation, and more. Also provided are model operating agreements and buy-sell agreements, both with alternate provisions and drafting outlines. And the listing of each state's statutory default rules saves research time!

Detailed Tax Guidance

A comprehensive tax chapter addresses the most troublesome taxation issues you will encounter with LLCs, including the following: Taxation of member contributions. Section 12.190 Tax allocations for contributed property. Section 12.200 Effect of debt on member's basis. Section 12.230 Allocation of partnership tax items. Section 12.240 Application of at-risk rules. Section 12.280 Passive loss restrictions. Section 12.320 Distributions. Section 12.440 Partnership conversion. Section 12.500 Professional partnership conversion. Section 12.520 Corporation conversion. Section 12.530 Self-employment tax. Section 12.620 Discount valuation problems. Section 12.680 Employer trust fund taxes. Section 12.710

Pamela Everett-Nollkamper N

has been a practicing paralegal since 1972. She also provides paralegal education consultant services to colleges and universities. She is an instructor in the paralegal program of Fullerton College in Orange County, California and serves on the Legal Assistant Advisory Committees of Fullerton College and Saddleback College. In addition to teaching, she has developed paralegal program curriculum for Fullerton, Saddleback, and Rancho Santiago Colleges. In addition to co-authoring this book, Ms. EverettNollkamper's writing credits include Bankruptcy Courts and Procedures (James), Fundamentals of Law Office Management (Cengage), and Legal Secretary Federal Litigation (James). Ms. Everett-Nollkamper holds a bachelor's of science degree in Vocational Education from California State University at Long Beach, and a master's degree in Business Management from the University of Redlands.

Drafting outlines and checklists make sure you consider all opt-in features and default provisions, and prevent accidental omissions of important clauses.

Problem areas are highlighted and solutions are provided ­ alternate clauses, client letters, and practical advice.

Covers Key Issues and Procedures

To help you traverse other difficult areas, The Limited Liability Company provides detailed discussions, step-bystep procedures, digitized forms, and citations to controlling authority. For example, the book walks you through these challenges: Ethical pitfalls for the practitioner. Section 3.20 Determining whether an investment contract exists. Section 3.41 9 ways to convert an existing entity to an LLC, including tax considerations and issues for professional partnerships. Section 3.60 Factors to consider when forum shopping. Section 3.60 Block voting issues and procedures. Section 8.26 Acquisitions, mergers, reorganizations, and dissolutions. Section 8.38 Checklist of recommended operating records and documentation. Section 8.51 Contributions of capital, allocation of losses, and distribution of profits. Sections 6.20, 8.54 The challenges of single-member LLCs. Section 8.59 Piercing the LLC veil. Section 11.30 Creditors' rights, bankruptcy. Section 11.40 Capitalization and dissolution litigation. Section 11.50-60

The free CD-ROM contains two volumes of state specific forms, charts, directories, and law.

Free CD with 300 forms

Chock full of practice-proven forms, this timesaving CD will help you efficiently form p LLCs customized to your clients' needs. A portion of the forms are listed below:

Letter to client re: conflict of interest, client letter introducing LLC as a new business entity, memo to client re: conversion of partnership to LLC, pre-formation checklist, client questionnaire, 2 agreements to form LLCs, certificate of ownership, consent to appointment by registered agent Instructional letter to client re: organization meeting, organizational letter to client, opinion letter re: LLC status, 3 sets of organizational meeting minutes 23 articles of organization specific to business of entity, amendment to articles of organization, articles of correction, letter to client re: articles, letter to client re: post-formation tasks 8 operating agreements, letter to client re: company meeting, client letter re: review of minute book, notice of special meeting of members, waiver of notice, 8 sets of minutes, irrevocable voting block proxy, LLC voting block certificate, 2 LLC block voting agreements Letter re: LLC record-keeping, records demand letter, petition for ex parte subpoena of records, affidavit in support of subpoena of records, order requiring inspection of records, notice of compliance with order for inspection, bill of costs for inspection, order approving bill of costs Transfer agreement with irrevocable power of attorney, entity termination agreement, amendment to operating agreement admitting new members, consent of members to admission, letter to client re: transfer of interest of equity investor, member's transfer of interest to equity investor, member's ballot re: transfer of interest 2 buy-sell agreements, agreement between owners to purchase ownership interest, opinion letter to bank re: loan and security agreement, manager's consent to loan, member's consent to loan, LLC's consent to loan, application for amended certificate of authority Complaint to pierce LLC veil, interrogatories for piercing the LLC veil, production of documents, requests for admissions, complaint for derivative action by members, records demand letter, petition for ex parte subpoena of records, affidavit in support of subpoena of records, order requiring inspection of LLC records 6 sets of interrogatories, authorization of agent to make classification election, notice of election of federal corporate classification status, resolution approving federal corporate income tax classification status, written consent of members, operating agreement classification provisions Articles of merger, unanimous consent to action of the board of manager, agreement and plan of merger, agreement of merger and plan of continuation, disclosure and agreement for payment of taxes, non-complete agreement 2 articles of dissolution, articles of revocation of dissolution, 2 applications for certificate of reinstatement Motion for charging order, order granting charging order, charging order, return of service of charging order, garnishee's answer to charging order, judgment debtor's demand for hearing

Plus a complete set of state-specific forms for each of the 50 states and the District of Columbia

Table of Contents

1. Introduction to LLCs

Definition, Current State Issues, Glossary, Separate Entity Case Law

(Partial Listing)

9. Asset Protection and Estate Planning

Default Rules, Foreign or Out-of-State Operation, Opt-In Features, Opt-In Checklist Form and Content of the LLC Agreement, Preparing the LLC Agreement/Management Provisions, Drafting Outline, LLC Agreement as Contract, Maintenance of the LLC Agreement, Withdrawal of a Member Tax Provisions in LLC Agreements: Tax Allocations Can Affect the Economic Consequences of the Members, Distributions, Self-Employment Taxes, Capital and Profits Interest, Special Allocations, Special Distributions, and Contributed Property Issues, Elections Under IRC §754, Tax Matters Member LLC Agreement


Using LLCs

Comparisons With Other Entities, Different Uses for LLCs, Series Limited Liability Companies

Asset Protection, Estate and Family Succession Planning, Other Uses of Assignees in Estate Planning, Asset Protection/Fraudulent Conveyance

10. I n t e r n a t i o n a l

The International LLC, U.S. Income Tax Withholding, Immigration and LLCs, International LLC Forms


Considerations in Using the LLC

Knowing the Client, Ethical Considerations, Criminal Law Considerations, Securities Law Considerations, Ownership Interest, Conversion From Existing Entities, Forum Shopping, Miscellaneous Considerations

11. L i t i g a t i o n

Threshold Issues, Piercing the LLC Veil, Creditor's Rights, Dissolution Litigation, Capitalization Issues, Case Law


Forming the LLC 7.

Role of the Advisor, Pre-Formation Issues Factors to Consider Pre-Formation: Organic Documents, Signing of Articles of Organization, Members, Non-Member Contractual Rights, Protecting the Minority Owner, Ownership Forms, Capital Structure and Contributions, The LLC as an Exempt Organization, LLCs as Joint Venture Vehicles Under IRS 501[c], Formation of the LLC as an Exempt Organization, Management, Company Name, Trade Name Protection, Duration, Out-of-State Operation, Business Purpose, Single-Purpose Entity, Registered Agent and Office, Secretary of State Rules or Regulations or Instructions, Effective Filing Date, Professional LLCs, Tax Considerations Pre-Formation Case Law: Who Is the Client, Intent to Form, Purpose, Integration of Organic Documents, Effect of Filing Articles, Formation Requirements, Professional LLCs, Pre-Formation Liability, Joint Ventures With Exempt Organizations, Formation Tax Considerations, Out-of-State Operations

12. T a x a t i o n

Single-Member Taxation: Introduction, Single-Member LLC Taxpayer Identification Numbers, Single-Member LLC May Affect Basis in Another LLC, Conversion to SingleMember LLC, Conversion From SingleMember LLC to Multi-Member, SingleMember LLCs and Marital Property/Tenancy by the Entireties and Community Property LLC Partnership Taxation: Taxation of Member Contributions, Tax Allocations With Respect to Contributed Property, Allocation of Deductions Attributable to Contributed Property, Allocation of Deductions of Appreciated Property and Other Consequences After Admitting a New Member, Allocation of Income and Deductions, Pass-Through Taxation, Basis and Distribution, Effect of Debt on Member's Basis, Allocation of Partnership Tax Items, Termination, Member Withdrawal and Retirement, Section 734 and Section 743 Basis Adjustment, Application of At-Risk Rules, Members Affected, Suspended Losses, Real Estate Exception Passive Loss Restrictions, Material Participation Formation and Operation Issues: Contribution of Appreciated Property, Classes of Ownership, Securities, Distributions, Allocations, Deductions of LLC Losses by Members, Limitations on Deductions Merger, Consolidation, and Conversion Issues, Dissolution Issues, Tax Matters Partner, Accounting Methods, SelfEmployment Tax Issues, Estate and Gift Tax Valuation Discounts, Employer Trust Funds, Anti-Abuse Regulations State Tax Considerations, Use of LLCs in Like-Kind Exchanges

Uniform Limited Liability Company Act

Key Provisions of the Uniform Act, The Future of the Uniform Act, Uniform Act Case Law



Organization Meeting: Annual CheckUp, Appointment of Committees, Corporation as Manager, Officers, Meetings of Members or Management, Notice Requirements, Voting Specific LLC Operational Issues: Liability, Piercing the LLC Veil, Rights and Remedies of Creditors of Members, Management, Fiduciary Duty, Agency, Ownership Certificates, Personal Residences or Vacation Home LLCs, Reorganization, Dissolution and Reinstatement, Terminating the LLC Conversion From Existing Entities: Preliminary Considerations, Conversion Procedures for: General Partnership, Limited Partnership, General Partners of a Limited Partnership, Professional Partnership, S Corporation Records: Recommended Items, Records, LLC Documentation, Members' Access to Records, Annual Report, Contributions of Capital, Distribution of Profits and Return of Capital, Transfer of Ownership Interest, Pledge of Ownership Interest as Security for Debt, Buy-Sell Agreements, Business Operations Outside the Home State, The Single-Member LLC Operations Case Law, Buying and Selling LLCs


Articles of Organization

Statutory Mandates, Drafting Issues, Step-by-Step Article Drafting, Articles Checklist, Filing Articles of Organization, Amendments, Formation Case Law


LLC Agreements

Drafting Issues: Avoiding Abuse by Majority Owners, Avoiding Future Management Problems, Avoiding Potential Operational Deadlock, Distribution of Profit and Allocations of Tax Gains and Losses, Voting Rights and Percentages, Divorce and Community Property Dissolution, Assignment, Arbitration and Mediation,

LLC Forms and Answers

YES! Please send me a risk-free copy of The Limited Liability Company and its CD-ROM with an invoice for $99 plus shipping. If I am not satis f R d fied, I may return the book and CD within 30 days and owe nothing. Send me the annual $69 updates on the same 30-day review basis. I may cancel the update service at any time.

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The free CD-ROM contains two additional volumes of forms and source material ­ 300 forms, checklists, letters, agreements, articles and more

How to Create and Counsel LLCs

or guidance on efficiently forming and expertly advising LLCs, turn to Phillip Jelsma and Pamela Nollkamper's The Limited Liability Company.

You will find the book and its free CD-ROM filled with practical advice, reproducible forms, tax consideration, state-by-state analysis, and more:


And state-specific forms, directories, charts s and citations

Procedures and issues


Mandated articles of organization; filing procedures; statutory requirements; and more...

Drafting stategies; entity conversion; forum shopping; ethical pitfalls; piercing the LLC veil; securities considerations

Pre-formation checklists; mandatory state articles of organization, with alternative provisions; state default rules; sample operating agreements, with opt-in features checklist and drafting outline; buy-sell agreements

See inside for table of contents, list of forms, sample pages, author bio, and more...


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