Termination of Partnership (LLC)

[Burke]

H & W were bamboolzed by snake oil salesmen from Calif into establishing LLC for "investment properties." Deal was to buy & sell and make a lot of $$$. No business was ever transacted within LLC. Except for a lot of fees and expenses to the CA outfit to prepare documents for organization and the tax returns which the participants had to pay for, there was no money flowing through the LLC. They want to terminate. State will automatically terminate if $50 annual fee is not paid. Dissolution papers filed with state cost $25. Any relevant reasons for paying the $25 since there are no assets?

[Gary2]

Have they filed for an EIN? Any chance of the IRS asking for their 1065?

While one doesn't like to throw good money after bad, it seems like $25 is a relatively small price in the scheme of things to avoid the hassle of having to prove that the state actually terminated the LLC down the road.

I'm assuming that you've already dealt with any state-specific issues that could pop up, such as "we've terminated your LLC's liability protection, but you still owe us for not filing your annual report and excise/franchise/income tax."

[Gretel]

H & W were bamboolzed by snake oil salesmen from Calif into establishing LLC for "investment properties." Deal was to buy & sell and make a lot of $$$. No business was ever transacted within LLC. Except for a lot of fees and expenses to the CA outfit to prepare documents for organization and the tax returns which the participants had to pay for, there was no money flowing through the LLC. They want to terminate. State will automatically terminate if $50 annual fee is not paid. Dissolution papers filed with state cost $25. Any relevant reasons for paying the $25 since there are no assets?

I had a situation in my State where the attorney suggested to not pay the fee and let the State automatically terminate. Once terminated this information can be found on the SOS website if ever proof is needed of termination.

[WhiteOleander]

In Texas, I had a similar situation. I talked to the SOS office. They said that they would not do anything if the members did not properly close the LLC. But, if at anytime down the road, they wanted to sell property in Texas, they would hold the closing until they closed the LLC. In other words, they don't chase them down like the IRS, but they will eventually get them to comply with officially closing the entity.

[Burke]

Have they filed for an EIN? Any chance of the IRS asking for their 1065?
While one doesn't like to throw good money after bad, it seems like $25 is a relatively small price in the scheme of things to avoid the hassle of having to prove that the state actually terminated the LLC down the road.
I'm assuming that you've already dealt with any state-specific issues that could pop up, such as "we've terminated your LLC's liability protection, but you still owe us for not filing your annual report and excise/franchise/income tax."

The CA people applied for EIN and filed tax return. No income. Just some expenses.
I can file a final 1065 and mark it such. State's annual fee billing says "LLC will be terminated after 90 days if fee is not paid." And I am sure they will send them a notice to that effect. But you raise an interesting point -- I can check with state on whether fee would still be due. My advice was to pay the $25 and make it official. Post from WO in Texas was interesting.