In Private Letter Ruling 200803004 the IRS ruled for the first time on the tax status of Series LLCs (Iowa is one of seven states to permit Series LLCs). The IRS concluded under the facts presented that each series of an LLC is a separate entity for tax purposes and each series could elect its own tax status (assuming it met the conditions required for the chosen tax status). In this ruling there were one or more series disregarded for tax purposes (meaning it had just one member), taxed as a partnership, and taxed as a C corporation.
Although other taxpayers cannot rely on this PLR, taxpayers can take comfort in the position the IRS took with respect to this Delaware Series LLC. Iowa Series LLCs can also take comfort in the fact that the new Iowa LLC law mirrors almost word for word the statutory provisions of the Delaware LLC statute.
For an historical perspective, take a look at the National Securities case found at 13 TC 884 (1949) (treating each series of a series trust as a separate entity). And for an excellent analysis of PLR 200803004, read the article by Steven E. Grob and Norman J. Hannawa in the March/April 2008, Business Entities (WG&L).
-Marc Ward
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