This article appears in and is reproduced with the permission of the Journal of Multistate Taxation and Incentives, Vol. 21, No. 10, February 2012. Published by Warren, Gorham & Lamont, an imprint of Thomson Reuters..

Tennessee recently joined California, Florida, Massachusetts, New York, and Texas as states that have published guidance on the state tax treatment of "series limited liability companies" ("series LLCs"). With Tenn. Ltr. Rul. No. 11-42, 9/6/11, Tennessee becomes only the second state with its own series LLC statute to issue such a ruling; Texas is the other (Tex. Policy Ltr. Rul. No. 201005184L, 5/5/10). (The other states' guidance referred to above are: Cal. FTB Informational Pub. No. 3556 ("Limited Liability Company Filing Information"), 4/1/11; Fla. Technical Assistance Advisement (TAA) No. 02(M)-009, 11/27/02; Mass. Ltr. Rul. No. 08-2, 2/15/08; and N.Y. Advisory Opinion TSB-A-98(8)I, 9/4/98.)

Series LLC background. To date, eight states (Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas, and Utah) have enacted series LLCs statutes, which generally allow for the establishment of separate series underneath a series organization or "master LLC." This essentially allows the LLC to be subdivided into separate series with separate rights, powers, and duties with regard to specific property or obligations of the LLC or with regard to profits and losses associated with specific property or obligations. Further, if certain statutory conditions are met, a series LLC can be formed such that the debts, obligations, and liabilities of one series will not be enforceable against the assets of another series—at least in a state that recognizes this type of legal entity. These series under the LLC are generally not treated as separate entities under state law and thus cannot have members, but each series of the LLC will be "associated" with specific members, assets, rights, obligations, and objectives.

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