ISBA LLC and S Corporation Tax Seminar Free Powerpoint

Jim Nepple and I presented a half day seminar on LLC and S corporation tax issues on May 15, 2018. My part focused on what pass-through entities are, and how Illinois LLC operating agreements should be modified to define agency authority (e.g., who can sign contracts for the company) and manager rights, if the company…

Business Owner Asset Loan Guarantees Don’t Produce Personal Title To Assets

Owners of part of a business who guarantee auto or other asset loans for the company do not get title to the asset for which the loan is made. They may or may not even get credit for a capital contribution to the company, depending on the internal organizational agreements (partnership agreement for a partnership,…

What advantages and disadvantages are there to Illinois S corporations and LLCs with an S Corp Election?

Both S corporations and limited liability companies (LLC’s)  are generally similarly treated in Illinois for liability and tax purposes, particularly if an S corporation election is in effect for the LLC. Internal organization statutes are different. What is similar is that there is liability limitation to investment in either type of entity, similar veil piercing doctrines, an…

Purchase Of Almost All Of A Business’s Assets Valid Though Manager Lacked Authority To Sell

In B&C Realty of Ill., LLC v. Chi. Stand-Up Mri, LLC, 2013 IL App (1st) 112064, http://www.state.il.us/court/r23_orders/appellatecourt/2013/1stdistrict/1112064_r23.pdf (Ill. App., 2013), the court held that a buyer of real property that constituted substantially all of the assets of a manager-managed limited liability company could win a title action against a co-manager of the LLC and the…

Third Party Fraud Is No Defense To A Bank’s Mortgage Rights, If You Sign Away Your Property And Don’t Record Your Liens

In Stump v. Swanson Development Co., 2014 IL App (3d) 110784, http://www.state.il.us/court/Opinions/AppellateCourt/2014/3rdDistrict/3110784.pdf, Feb. 10, 2014, the court held that a Mr. Stump had been induced to sign a deed to some real estate by fraud, and held that two individuals were liable for failing to include Mr. Stump in a limited liability company, and for…

Arbitration Provisions In LLC Agreements Are Enforceable, Even If Other Terms Are Not

The Ritz-Carlton Management Company (RCMC) was able to compel arbitration as provided for in a condominium association LLC operating agreement, even though condominium owners alleged the agreement was unconscionable, and that RCMC had committed fraud. (Ritz-Carlton Mgmt. Co. v. Ass’n of Apartment Owners of Kapalua Bay Condo. (D. Haw., 2013), rehearing denied, http://www.gpo.gov/fdsys/pkg/USCOURTS-hid-1_13-cv-00055/pdf/USCOURTS-hid-1_13-cv-00055-1.pdf ) The…