This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
Insights Insights
| less than a minute read

Watch your Operating Agreements

A recent private letter ruling reminds us - if you have a client that is making an 8832 election for an LLC to be taxed as a corporation (and then an S corporation) - and that LLC used to be a tax partnership - make sure that the operating agreement does not reflect partnership allocation language.  

You can fix this - in this PLR the taxpayer was given administrative grace to fix its operating agreement and cure some distributions inconsistent with an S corporation- but it will be with a letter ruling and the fix is not guaranteed.

Make sure you review the operating agreement and amend it before the conversion!

Check your operating agreements before converting LLCs from partnerships to S corporations.


teichman_harry, insights, tax