Capital Account-based Liquidations: Gone with the Wind or Here to Stay?
by Brian J. O'Conner, JD, LLM (Taxation) and Steven R. Schneider, JD, LLM (Taxation)
Almost every tax practitioner who has prepared or explained an LLC agreement has at one time or another faced the question of whether the LLC should liquidate, when the time comes, according to positive capital accounts. For some practitioners, the answer often is an unequivocal "yes:'
Over the past few years, however, fewer tax practitioners have recommended capital-account-based liquidations for LLCs. Download this article to learn more how and why these provisions might be appropriate and critical when drafting LLC Operating Agreements.