Recent News

LLC Interests And Securities – Personal Liability Looms

Washington State Business and Real Estate Lawyer David C. Tingstad | 2/24/2021
When drafting LLC agreements, practitioners ought to remember that LLC interests may be securities subject to both state and federal securities laws. When an LLC interest becomes a security, additional disclosures of  “material facts” are required.  Without such disclosures, personal liability for securities fraud looms. The recent Washington Court of Appeals case of Freeman v.… Read More

LLCs And Capital Accounts: An Introduction

Washington State Business and Real Estate Lawyer David C. Tingstad | 2/17/2021
Lawyers advising LLCs and their members must understand capital accounts from a tax perspective. When LLCs are taxed as a partnership, a member’s capital account reflects a portion of a member’s economic interest in the LLC. The tax regulations surrounding capital accounts are lengthy and complex, but understanding the basics allows practitioners to fully counsel… Read More

Tax Considerations For Entity Choice With Real Property

Washington State Business and Real Estate Lawyer David C. Tingstad | 2/10/2021
Real estate investors frequently come to me seeking advice regarding placing their investments into business entities for asset protection and other business reasons.  Almost always, the LLC is the entity of choice for real estate investments. The reasons behind this simplistic answer, however, are far more complex. Realization Events Under the Section 1001 of Tax… Read More

LLCs And Taxation – To Be Or Not To Be (A Corporation)

Washington State Business and Real Estate Lawyer David C. Tingstad | 2/3/2021
As I have noted previously (along with numerous other commentators), LLCs are not corporations. Both the basic structure of, and the laws applicable to, each respective entity are significantly different.  However, there may be similarities as to the tax structure of LLCs and corporations if the LLC members so elect. A corporation can choose only… Read More

Cash-Out Mergers And Majority Control

Washington State Business and Real Estate Lawyer David C. Tingstad | 1/20/2021
Cash-mergers are one way controlling members of LLCs can legally extinguish the interest of minority members.  One of the leading commentators on “business divorce” is New York lawyer Peter Mahler.  This week, Peter outlined an influential New York appellate decision (see here), which dramatically alters the ability of controlling members of LLCs to oust minority… Read More

A Friendly Reminder: You And Your LLC Are Different

Washington State Business and Real Estate Lawyer David C. Tingstad | 1/13/2021
Individuals regularly hold their real estate in LLCs for many reasons, including asset protection, because an LLC is a “separate legal entity” RCW 25.15.071 (3) and members are not liable for debts of the LLC RCW 25.15.126 (1).  The distinction between an individual member and an LLC was front and center in a recent Washington… Read More

Carefully Drafting ….or Else!

Washington State Business and Real Estate Lawyer David C. Tingstad | 1/6/2021
Draft carefully, because ambiguous drafting may leave you at the mercy of default rules of the LLC Act.  A recent Wisconsin Supreme Court decision, Marx v. Morris, 925 N.W.2d 112 (Wisc. 2019), illustrates the need for careful drafting. The Case’s Significance Before delving into the facts and dispute arising out of Marx, it is important… Read More

Members vs. Transferees

Washington State Business and Real Estate Lawyer David C. Tingstad | 12/16/2020
In last week’s post, I identified some of the key distinctions when one holds an interest in an LLC, but is not a member (see here).  Members and transferees hold different rights. This post seeks to further explore the similarities and differences between members and transferees. Rights of Members and Transferees Members and transferees share… Read More

You Hold An Interest In An LLC, But Are You A Member?

Washington State Business and Real Estate Lawyer David C. Tingstad | 12/9/2020
You may have heard that “membership has its privileges.”  But what if a person has an interest in an LLC but is not a member?  In general, such a person is a “transferee” and holds only a “transferable interest.” Transferable Interest Defined Under RCW 25.15.006(20) a transferable interest “means a member’s or transferee’s right to… Read More

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