Skip to main content
Mark K. Smallhouse
Avvo
Pro

Mark Smallhouse’s Answers

34 total

  • My soon to be ex husband is asking for a copy of our tax return, am I legally obligated to give him a copy?

    I filed a divorce, and waiting for the constable to serve him. He doesn't like the divorce and after calling me that he need a copy of our tax return, he texted me that "this is what you want, this is what you're going to get." Am I legally obliga...

    Mark’s Answer

    I am assuming that both of you live in NV?Nevada is a community property state. If you are residents of NV or another community property state then all earnings are presumed to be community property. I am a corporate transactional attorney in Reno. I would suggest that you discuss this with a divorce attorney in LV Area. Let me know if you would like a referral

    See question 
  • How do I pay LLC owners based on work done, not based on the percentage of ownership?

    A partner and I setup an LLC for our web design shop. We typically do separate projects, which are service-based projects where we produce websites for clients, and the client owns the deliverable. We would like to pay ourselves for the work we ...

    Mark’s Answer

    Very simple answer. If you are taxed as a partnership then you would pay yourselves via a guaranteed payment; or alternatively as a special allocation on the basis of work performed

    See question 
  • Can all members of LLC be considered limited partners and not pay Self- Employment tax?

    4 people with various(60%, 15%, 15% and 10%) membership interest pooled their money and put it in A LLC. In turn A LLC partnered up with X LLC to form AX LCC, in which X LLC will be a general partner. AX LLC will generate ordinary income from it'...

    Mark’s Answer

    Yes, in certain LLCs that do not provide professional services, the provisions of Proposed Treasury Regulation 1.1402(a)-2 permit members of the LLC who do not perform materials services on behalf of the LLC, and whose rights are limited to those that would similarly provided to a limited partner can avoid the imposition of self-employment tax. The application of the Proposed Regulations are relatively technical, and great care must be taken in drafting the operating agreement so that it complies with the Proposed Treasury Regulations. The Proposed Treasury Regulations were initially adopted in 1997, and have not been rescinded or amended since that date.

    Additionally, although a previous answer suggest using an S corporation election instead, to do so, often hamstrings the receipt of many of the benefits of using LLC, including the use of special allocations, etc.

    This is an area in which you should obtain competent legal advice in structuring the Operating Agreement.

    See question 
  • I have started a LLC and are 2 members 50/50. I would like to get rid of the other member?

    I paid for everything that the company has, and he has not paid anything and seems to not be giving much effort and just wants the reward at the end of the day. I have other people in mind that I would love to work with in this industry. Starting ...

    Mark’s Answer

    All of the previous responses are correct, and well thought out. However, they do not take into account the provisions of Section 17707.03 of the California Revised Uniform Limited Liability Company Act--which provides a member with the alternative of filing an action for judicial dissolution in certain situations. In many instances, in the case of 50/50 voting rights, it can be the only way to get your problem resolved. You should consult with the an attorney as to using that provision as a possible alternative.

    See question 
  • How does residency length affect Nevada homesteads?

    I am looking at buying a house in Reno when my rental contract is up. This will equal of period of 12-18 months of residency in NV (moved from CA). I have read there is a 1215 day period, but this pertains to federal bankruptcy code. NV law protec...

    Mark’s Answer

    Bear in mind that the homestead exemption will only protect you in bankruptcy. Unless and until you file bankruptcy it is ineffective. There are other non-bankruptcy alternatives that can provide quicker and more effective asset protection in the State of Nevada, such as the use of trusts such as IDGTS and QPRTs

    See question 
  • As a Real Estate Broker, if I form an LLC real estate investment club whose biz is to buy & sell real estate & whose members

    would vote on what property to purchase for remodeling & then sell, I'm assuming that is "NOT" considered a syndication & "securities risk." From what I've read, syndicating & securities risk is where investors are depending on a syndicator to ad...

    Mark’s Answer

    I agree with both of the previous answers. From your post it appears that as the manager of the LLC you would be selecting the properties (or the pool of properties) from which the club members would select. It appears that is would violate the classic Howey test as to what constitutes a security.

    See question 
  • Changing the type of LLC

    Currently a consulting LLC will like to change to a freight forwarder LLC. What must be done? The c g age is needed to be a IAC approved.

    Mark’s Answer

    Dana is correct. You may also want to change the manner in which the LLC is taxed.

    See question 
  • Does an LLC in Nevada need provisions in its operating agreement to stop distributions to a member with a charging order ?

    I have read: "LLC members may want to provide for the possibility of charging orders against their members if the LLC becomes subject to a charging order because of a judgment against a defaulting member, the LLC will convert amounts that...

    Mark’s Answer

    • Selected as best answer

    I think that you may be mixing up Allocations and Distributions. Items of incomes and loss are allocated among members for tax purposes, Distributions are cash or other property that is otherwise distributed to members (or to those with charging orders)--generally post tax. I agree with the first answer above--that it is dangerous to have a reallocation of distributions provision. The better way to handle this problem is treat treat it in just the opposite fashion. What we do is is draft the operating agreement to provide the creditor with a charging order with a load of phantom income, through allocations of income without distributions from which to pay any tax liability. We also allow the creditor to vote the during the period that the charging order is outstanding--but require super majority approval so that the creditor does not have any ability to require a distribution. The end result, is that under a long-standing IRS revenue ruling, the ability to receive distributions under the charging order (with the right to vote), authorizes the LLC to treat the creditor as a member for tax purposes and deliver a K-1 for all income that otherwise would be allocated to the charged member. The end result is that the creditor gets a K-1--and has tax liability without any distributions from the LLC to pay the tax--and generally as a result, is happy to settle and do anything to get out of the phantom income predicament. The key is careful crafting of the operating agreement provisions. This is a better result. If you expressly provide for reallocating the creditors distribution to salary or bonus, you may get a court to rule that you are treating a creditor unfairly an that the re-allocation is a de-facto fraudulent conveyance. Let me know if you would like further information on this procedure.

    See question 
  • Can I request payment for accrued personal time off?

    I gave 2 weeks notice but the company decided to pay me the 2 weeks and I could leave today. This after 2 hours of trying to get me to stay. I am a cfo. I have several weeks of unused annual leave. The company decides when I can take any time ...

    Mark’s Answer

    The state of Nevada doesn’t currently have a provision regarding payment of vacation benefits, however, it has been interpreted by court and statutory interpretations, that vacation pay may be included under the definition of "wages," and may be due upon termination.

    See question 
  • If I cash out an annuity and put $30,000 from annuity into a a regular bank account....can a creditor take account?

    I am cashing out an annuity and getting $30,000 distribution. I will put the $30,000 in a regular bank savings or checking account just on my name. Once the former annuity money goes into the regular bank account, can a creditor who gets a judgmen...

    Mark’s Answer

    Yes! Holding the proceeds from the annuity in a regular Nevada bank account would make them subject to levy by a judgment creditor. Alternatively, the Nevada 2011 legislature created unlimited assets shelters for individuals with closely held corporations, life insurance policies and annuities. As a consequence, you would be moving an asset (the annuity) that is protected by

    See question