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Nevada Registered Agent Service™ The
PREFERRED choice in Registered Agents since 1991 |
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What is a Restricted LLC?
Last updated Sunday, April 7, 2024
A restricted LLC is an ordinary Nevada LLC
that elects to be restricted in its initial articles of organization. The
restricted LLC election imposes restrictions and limitations on the LLC's
ability to make distributions. Nevada
statute NRS 86.161 provides, in part, that unless otherwise provided in the
articles of organization, a restricted LLC shall not make any distributions to
its members with respect to their membership interests until 10 years after the
date of formation of the LLC (or amendment of the articles of an existing LLC
to become a restricted LLC), so long as the LLC has remained a restricted LLC.
Why would one want to set up an LLC which by
its charter may not make any distributions to members for a period of 10
years? The reason is Internal Revenue
Code Section 2704(b), which provides that when valuing an interest in an entity
for gift tax purposes, the liquidation restrictions contained within the LLC
operating agreement have to be disregarded by the appraiser if the LLC is owned
by family members both before and after the transfer. Code Section 2704(b)(3)(B) provides however
that a restriction that is imposed by state law cannot be ignored.
Nevada
Commercial Registered Agent
Entity # E0502742015-6
NV Business ID NV20151637034
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Revised April 7, 2024 10:24 AM
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