In this 3.5-hour, July 31, 2012 presentation, Louis A. Mezzullo, Esquire, a partner in the Rancho Santa Fe, CA offices of McKenna Long & Aldridge LLP, examines two significant areas of consideration when creating Family Limited Partnerships (FLPs) and Limited Liability Companies (LLCs). 

Part 1 - FLPs And LLCs: Important Drafting Issues

This 1.75-hour segment offers a thorough analysis and explanation of the numerous, and important, issues to be addressed when drafting FLP and LLC Agreements. In addition, Mr. Mezzullo gives valuable suggestions on how to handle those issues.

Major topics include:

üIntroduction: State Law Issues    

üImportant Provisions In The Operative Agreement    

• business purpose; economic arrangement between partners or members

• management structure

• dissolution, liquidation and withdrawal

üClassification For Income Tax Purposes    

• pre-1997 and post-1996 rules

üEstate Planning Issues    

• special valuation rules; other estate and gift tax issues 

ü Other Tax Considerations    

• cash method of accounting; special allocations

• contributions of appreciated property

• constructive termination; basis adjustments; passive losses

• more

üNontax Benefits   

• management of assets; reduced expenses

• creditor protection; investment policies

Part 2 - FLPs And LLCs: Income Tax Issues When Forming And Dissolving

This 1.75-hour talk gives a useful explanation of the income tax issues which should be addressed both when an FLP or an LLC is formed and when it is dissolved. To provide a practical illustration of these issues, Mr. Mezzullo goes through several factual examples.

Major topics include:

üFormation Of The Entity    

• investment company issues

• contributions of assets subject to liabilities

• disguised sales

üDistributions Subject To Gain Recognition    

• general rule

• gain provisions

• distribution gain

• precontribution gain

• disproportionate distributions

• avoiding gain on distributions

üFour Examples    

• disproportionate distribution to one member

• distribution to a member in liquidation of donor's/member's interest 

• distribution liquidating a donee’s/member's interest

• liquidation after parents' death

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