I am in a 50/50 partnership, however the partner has no longer been active for over a year. Can I file as LLC single-member?

Asked over 1 year ago - Ebensburg, PA

I have generated and withdrawaled from our account and he has not been active at all. Can we just write up an agreement that he left the partnership last year? The LLC is not very active with very little income and investment by either.

Additional information

Also wanted to know if the above is not possible, can I file the 1065 showing that all the business income is my income because I was the only one active in the business and only one using and withdrawing from the business account. Or will he get taxed 50% and I get taxed 50%? Anyway to make it so I am the one that handles the taxes for the business?

Attorney answers (2)

  1. Christopher Edward Ezold

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    Contributor Level 17

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    Answered . I am an attorney licensed in the Commonwealth of Pennsylvania, and the States of Delaware and New Jersey. My practice includes employment, business and health care law. Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed the relevant documents and facts, and I do not represent you. Therefore, my discussion below is not a legal opinion, but is informational only. Finally, my discussion applies only to issues to which Pennsylvania, Delaware, New Jersey or Federal law applies.

    That being said, you cannot unilaterally remove your partner from the LLC or refuse to pay him his share of the LLC income, unless the operating agreement allows you to do so. It is possible that his share of the income is $0, depending on your agreement. In that case, the tax effect would be the same as if he was not a member at all. However, you do NOT want to continue to have him as a member if he has truly withdrawn from the business. You need to speak to a business attorney ASAP to get this cleared up.

    If you would like to discuss this matter further, please feel free to contact me at the below address(es) or telephone number.

    /Christopher E. Ezold/

    The Ezold Law Firm, P.C.
    Employment, Business and Health Law
    One Belmont Avenue, Suite 501
    Bala Cynwyd, PA 19004
    (610) 660-5585
    Cezold@Ezoldlaw.com
    www.ezoldlaw.com

    Answered 8 months ago. Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed... more
  2. Michael Joseph Viscuso

    Contributor Level 6

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    Answered . You cannot unilaterally remove a 50% owner of an LLC (unless provided for by the Operating Agreement, which would be very odd). If you want to keep the existing LLC active, you need to purchase your partner's interest, or he must convey it to you for nominal consideration. You must then amend the articles of organization filed with the Department of State and amend the operating agreement to be consistent with the change in membership.

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