White Paper

4 Pages
  • 4 Pages

Federal Tax Issues to Address in Real Estate LLC Agreements – Overview


Most LLCs, including most real estate LLCs, are straight-up partnerships.

Most real estate multi-member LLCs are, to use a common term among partnership tax professionals, straight-up partnerships. This means that under their LLC agreements, allocations of LLC profits and losses among the members and distributions of LLC cash and other assets to the members are proportionate to the member’s shares of contributions. But even LLC agreements for straight-up partnerships should contain qualified income offset provisions. This white paper reviews this type of partnership and discusses why real estate LLC agreements should avoid deficit restoration obligation provisions.



John M. Cunningham

John M. Cunningham

McLane Middleton, P.A.

  • Former trial attorney with the Tax Division of the United States Department of Justice and a former member of the International Trade and Tax Department of Baker McKenzie LLP
  • Author of Maximizing Pass-Through Deductions Under Internal Revenue Code Section 199A, published by Wolters Kluwer, an international legal and tax information service
  • Practice is focused on LLC formations and other transactions involving LLC law and tax and on advising clients on how to structure their businesses to maximize their section 199A pass-through deductions, section 199A services have saved his clients tens of thousands of dollars in federal income taxes
  • Author of Drafting Limited Liability Company Operating Agreements, also published by Wolters Kluwer, leading U.S. LLC formbook and practice manual
  • Former chair of both the corporate and tax sections of the New Hampshire Bar Association
  • Chaired and was a principal author of the Revised New Hampshire Limited Liability Company Act

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