Tenn. Comp. R. & Regs. 1320-06-01-.41 - SERIES LIMITED LIABILITY COMPANIES

(1) The Tennessee Revised Limited Liability Company Act, T.C.A. §§ 48-249-101 et. seq., generally permits the establishment of one or more designated "series" within a limited liability company, commonly referred to as the "Master LLC." The Master LLC and each series is treated as a separate entity and must determine its tax classification as though it were a separate limited liability company. The Master LLC and each series will generally be classified as a corporation, partnership, or other type of business entity, consistent with the way it is classified for federal income tax purposes. A Master LLC or a series that is wholly owned by a corporation and that is disregarded for federal income tax purposes will be disregarded for franchise and excise tax purposes. All other federally disregarded Master LLCs or series are treated as separate entities for franchise and excise tax purposes.

(2) A Master LLC and each series doing business in and having substantial nexus with Tennessee must separately register with the department and set up separate tax accounts. A series must provide on its application for franchise, excise tax registration information about the Master LLC under whose organization documents the series was authorized.

(3) Unless a series is classified as a disregarded entity for franchise and excise tax purposes, each series must file a separate tax return. The Master LLC must also file a separate return unless disregarded. The Master LLC and each series will be treated as separate entities for purposes of assessments, refunds and taxpayer remedies, unless disregarded.

(4) The Master LLC and each series must apply separately to qualify for any applicable franchise and excise tax exemption. On any application for exemption, the series should state that it is a limited liability company. Because each series is treated as a separate entity under state law, only that series' activities, income, and other attributes will be considered in any applicable exemption determination.

(5) If a series terminates its existence, it must obtain a separate tax clearance.

Notes

Tenn. Comp. R. & Regs. 1320-06-01-.41

New rules filed June 28, 2016; effective 9/26/2016.

Authority: T.C.A. §§ 67-1-102, 67-4-2004, 67-4-2007, 67-4-2106, 48-29-101, 48-249-309, and 48-249-1003.