Income taxation of LLC income in year of death.(limited liability company)

Tax Adviser, The, June, 2007 by Ellentuck, Albert B.

For a deceased member, a limited liability company's (LLC's) tax year ends on his or her date of death (DOD); the member's distributive share of LLC income earned through the DOD is reported on his or her final return. Termination of the LLC's tax year also occurs if the LLC terminates on a member's death or because the LLC's business is discontinued or the LLC has only one member remaining. Rev. Rul. 99-6 deals with the consequences of changing from a multi-member LLC to a single-member LLC.

Transfer under a Buy-Sell Agreement

Service LLCs, such as law and accounting firms, often prohibit deceased members' interests from being transferred to anyone but an existing LLC member. To ensure this result, the remaining members (as opposed to the LLC itself)...

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