Tuesday, September 19, 2017

The Magical LLC, Part 1

A recent New Republic article states: 

The Community Law Center, a local legal services group, launched an investigation into 1906 Boone and hundreds of other vacant properties around Baltimore. The hunt took more than a year. In many cases, the identity of a property owner was hidden behind a maze of shell companies; an operation called Baltimore Return Fund LLC, for example, had purchased 1906 Boone at a city tax sale for $5,452. Eventually, the investigation revealed a Texas-based web of nearly a dozen LLCs—limited liability corporations, a form of legal tax shelter—that controlled more than 300 properties in Baltimore. Nearly all had been purchased at tax sales, often online, between 2001 and 2010. Most sold for less than $5,000. Many were vacant and in bad shape.

Okay, so we all know LLCs are not limited liability corporations (right?). But the entity form is a "legal tax shelter?"  As a pass-through entity?  What does this word salad mean?  Would this be less of a scourge if some guy owned them instead of the magical LLC?  I don't understand what the entity form has to do with any such concerns at all.  

Suppose they did the research and found out Benefit Corporation, Inc., owned all of them. Would they have breathed a sigh of relief?  

So many questions, so few answers. 

H/T to our astute and helpful reader Gregory J. Corcoran.

http://lawprofessors.typepad.com/business_law/2017/09/the-magical-llc-part-1.html

Corporations, Joshua P. Fershee, LLCs | Permalink

Comments

Hah - looks like they got the message. It's been corrected to "limited liability companies" now. Still the same language about tax shelters though.

Posted by: Ann Lipton | Sep 20, 2017 1:54:00 AM

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