A series LLC allows for the creation of separate "series" within an LLC. Each series functions similarly to a separate LLC, with its own members, assets, liabilities, business purpose, and investment objectives. The separate series provides liability protection from the other series and the parent LLC. The series LLC structure is useful for holding companies and real estate investors with multiple properties, allowing them to isolate the assets and liabilities of separate investments or properties.
Tax Flexibility and Treatment
The IRS has issued proposed regulations stating that each series can individually elect how it is taxed – either as a partnership, S corporation, C corporation, or disregarded entity. This allows flexibility in tax planning. However, state and local authorities may have their own rules for taxing series LLCs. For instance, California requires each series to pay a franchise tax.
Series LLC Considerations
As series LLC use grows, more guidance will be needed on their tax treatment. But the overall concept provides a more efficient structure than forming completely separate LLCs for each new enterprise, project, or property. By segregating assets internally into separate series, liability protection can be achieved without multiplying state fees and administrative costs.
States Not Recognizing Series LLC
Which states do not recognize series LLCs?
- List of states not recognizing series LLCs:
- To be filled with specific states
Do a series LLC have to file separate tax returns?
A series LLC allows the creation of separate "series" within an LLC. Each series functions similarly to a separate LLC with its own members, assets, liabilities, purpose, and objectives. The separate series provides liability protection. The series LLC structure benefits holding companies and real estate investors with multiple properties, allowing them to isolate investments or properties.