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Re: Assigning losses in an LLC

> I am looking to find out if something is legal from a tax

>> perspective because I heard of a company doing something >> along these lines a few years ago but wasn't privy to the >> details. >> >> Basically if there are two owners to a LLC can one owner >> accept all the loses to the LLC while the other owner >> accepts none? > Since losses are "asigned" based on membership, that > works if one owner has 99% ownership, thus the other > minority member would be "awarded" 1% of the loss. > > Remember though, deductibility on a member's 1040 still > depends on basis within the LLC.

Is the reason good enough? That one of the two partners is funding the venture which is not profitable yet so he gets to accept all the loses. Steve

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Reply to
scruffy323
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This brings up a good question. From what you say, only one of the two members put in money. The question for debate here now becomes, can a person be a member of an LLC without having invested any funds atall? Might the answer depend on state law? Do all states have same laws on the subject? Is there a Uniform LLC Act? ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

LLC law is pretty consistent from state to state.

As I understand it, the contributions to the LLC can be anything that the members agree to. For example, one partner might put in all the money, the other does all the work, and they agree to be 50/50 owners. Having done that, you'd still need a valid reason to divide losses other than by the ownership shares. No, I don't know what the IRS considers to be a valid reason, either. Regards, John Levine, snipped-for-privacy@iecc.com, Primary Perpetrator of "The Internet for Dummies", Information Superhighwayman wanna-be,

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Reply to
John L

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