Single Member LLCs are Not Always Disregarded for Tax Purposes

For federal income tax purposes, single member LLCs are disregarded.  That is not the case with respect to gift taxes.  In Pierre v. Commissioner, 133 T.C. 24 (2009) the Tax Court held that a single member LLC would not be disregarded for gift tax valuation purposes under the IRS "Check the Box" regulations.  What this meant in Pierre was that the taxpayer's transfer of an interest in a single member LLC was treated as just that, a transfer of an interest in an LLC, and not a transfer of a proportionate share of the assets owned by the LLC.  Thus, the transfer was subject to discounts for marketability and for lack of control.