Level 3

No EIN for multi member LLC (holding stocks to give to EE)

Forum|Forum|5 years ago
November 19, 2020
2 replies
21 views

Hello:

My client just brought this to my attention. In 2019, he created a multi-member LLC to simply hold the stocks that will be giving out to employees (EE). Mainly, this LLC was treated as a holding trust mechanism and will be giving out stocks to EE when they are entitled to. No other activity. My client believed he did not need to file any EIN with IRS and did not need to select any tax entity to file any tax return. I don't think he is right and this is not ok with law. Thoughts?

This topic has been closed for replies.

sjrcpa

Level 15

"he created" So how are there multi members?

What sort of income or expenses might this LLC (single or multi member) have?

Where did the stock it is holding come from?

The more I know the more I don’t know.

JJKAuthor

Level 3

Thank you for your quick response. At this point, I only knew that this LLC has at least 2-3 members and no income/expense except for holding stocks. I believe these stocks are transferred out from a current C Corp (has normal operating trade/income/expense) out to this LLC. However, these stocks are not granted so they are not reported in C Corp financial statements at all.

qbteachmt

Level 15

"and will be giving out stocks to EE when they are entitled to."

I wonder if this person really meant to have an ESOP. Because that is just weird, otherwise.

Don't yell at us; we're volunteers

JJKAuthor

Level 3

I believe these stocks are held for ESOP. I think the way of creating this "holding LLC" is wired and this LLC was created for no activity, EIN and no tax return filing.....so wired.

Not sure if IRS will allow a LLC (except Single Member LLC) being created without any EIN and tax return filing???

sjrcpa

Level 15

Creation of an LLC is a state law matter. IRS has nothing to do with it.

The more I know the more I don’t know.

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