GA spouses considered single-member LLC?

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Latest post Fri, Apr 14 2017 4:30 AM by Taxagent. 2 replies.
  • Wed, Apr 12 2017 4:52 PM

    • cathammer
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    GA spouses considered single-member LLC?

    Wanting to set up an LLC in Georgia for a single residential rental property, for potential liability protection.  I understand that this income is considered passive, so just passes through without withholding, social security taxes, etc.  It also seems that normally a single member LLC would not have to do any extraordinary paperwork, tax filings, etc. to distribute or report income, but a muti-member LLC would.

    The CPA with our financial adviser says that a married couple can operate a two-member LLC in these regards the same as a single-member LLC if the LLC is a "qualified entity" and we elect to treat it as a "disregarded entity" for federal tax purposes.  We seem to meet the three "qualified entity" requirements, as the house was bought after we married and titled as JTWROS, we are the sole owners, and file jointly.

    My question is whether there is any impediment in Georgia not being technically a "community property" state, although this particular real estate would seem to be such. Some explanations of the rules reference the spouses being in a "community property jurisdiction".  Does this mean it has to be in a community property state, or just that the particular holding has to be community property?

    Here's the specific article that caused me to raise this question: http://www.limitedliabilitycompanycenter.com/husband-wife-llc.html

    Thanks, all!

  • Thu, Apr 13 2017 10:54 AM In reply to

    Re: GA spouses considered single-member LLC?

    cathammer:
    My question is whether there is any impediment in Georgia not being technically a "community property" state, although this particular real estate would seem to be such.

    Huh?

    First of all, there's nothing "technical" about GA not being a community property state.  That being the case, and assuming your statement that "this particular real estate would seem to be such" means that you think the property in question is community property, that's obviously wrong.  More importantly, why do you think the property's status as marital/community property makes any difference?

    I suggest that, instead of seeking legal advice from a CPA, you consult with a local attorney.

  • Fri, Apr 14 2017 4:30 AM In reply to

    Re: GA spouses considered single-member LLC?

    One of the requriements for a LLC owned by both a husband and wife to be treated as a sole proprietorship of just one of the spouses for federal tax purposes is that the LLC must be “wholly owned by a husband and wife as community property under the laws of a state, a foreign country, or a possession of the United States.” Rev. Proc. 2002-69. Georgia is a not a community property state. Thus, Georgia law will not treat your ownership of the LLC as community property. If you also live in Georgia then only Georgia law is relevant here and your ownership in the LLC will not be treated as community property and the option to treat the LLC as a sole proprietorship would not be available to you. So in what state do you and your husband live?

    Note that it is the ownership of the LLC that matters here. The real estate, once transferred to the LLC, certainly would not be community property in any state because the owner of the real estate would be the LLC, not a married individual.

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