LLC Preferred Interest Qualifies For Marital Deduction

more+
less-
more+
less-

In a recent private letter ruling, the question was raised whether an LLC interest that received a preferred return with additional LLC cash flow going to other common interests could qualify for the marital deduction if funded into a QTIP trust.

The IRS ruled that the property did qualify for the marital deduction. However, this was based on certain elements being present – absent their presence the ruling may not have been issued. These key elements were:

1. The QTIP trust itself had all the Section 2056(b)(7) requisite elements, including required income distributions and limits on distributions to persons other than the surviving spouse.

2. The preferred units provided for an eight percent return on the aggregate face value, payable no less often than annually.

3. The preferred units cannot be redeemed for less than the greater of their face value or fair market value.

4. The rights of the preferred units cannot be altered by the holders of the common units.

5. The sale of preferred units is not unreasonably restricted.

PLR 201410011 (3/7/2014)

 

Written by:

Published In:

LLC
Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Charles (Chuck) Rubin, Gutter Chaves Josepher Rubin Forman Fleisher P.A. | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×