LLC Formation

[kas]

Taxpayer lives in Texas. Has residential rentals in Okl.
wants to put the rentals in an LLC.
Is the LLC formed and filed in Texas or Okl.??
Thank you for your replies
Kas

[ChEAr$]

If to be formed in OK, I suspect he will need a resident of that state, sort of like a corporate registered agent.

Better that the LLC be formed in TX, then also registered in OK, similar to a foreign corporation. Be sure all the i's are dotted and t's crossed, and that properties are actually titled in name of the LLC.

Richard Gardner and maybe Mike Smith maybe will also chime in.

[Gary2]

Taxpayer lives in Texas. Has residential rentals in Okl.
wants to put the rentals in an LLC.
Is the LLC formed and filed in Texas or Okl.??

That's more of a legal question than a tax question, since there may be better protections in one state than the other. It's likely that if the LLC is not formed in OK, then OK will still require the LLC to register with them as a foreign entity. Since the fee structures for domestic and foreign entities are often the same, registering in TX would mean paying double fees, one to TX as a domestic LLC and one to OK as a foreign LLC. For the rental real estate I own (indirectly), the LLC was formed in the same state as the real estate. Both states get a crack at the income, but MA doesn't get any registration fees for the LLC.

In any event, suggest to the client that they refer the question to an attorney familiar with real estate and business entities in both states. There's no point in being penny-wise and pound-foolish around this.

[Gary2]

If to be formed in OK, I suspect he will need a resident of that state, sort of like a corporate registered agent.

That's a readily available service. I pay my attorney once a year to make sure the proper annual paperwork is filed. It runs about $150, the majority of which goes to the state, not the lawyer.

[Burke]

At a seminar last year with Estate Planning Attorneys who hold these and deal expansively with trusts/estates, they suggested to an attendee that he form an LLC in VA for rental property owned in NJ. This made the adminstration of the estate (including the LLC) at the death of the owner subject to VA law, which is quite favorable and much easier for a VA executor, obviating the need for an attorney to handle the disposition in NJ. As I recall, it also involved titling the LLC in the existing Revocable Living Trust formed in VA. I do not believe it would affect the taxation of income in either state. Obviously, he needs to check with both of his respective states as they all may have different requirements on registration.