Tax News
Series LLC in California

Although California law does not allow for a series limited liability company (LLC) to be formed in California, it does recognize them.

A series LLC is a master LLC whose organizing document provides for separate sub-units (series), which operate as independent LLCs. Features include:

  • Each unit has its own owners (members) and may be managed separately from the master LLC and other units.
  • Each unit must maintain separate books and records.
  • As with a regularly-formed LLC, the owners (members) of each unit are not financially responsible for the unit's debts and obligations.
  • A unit may conduct part of the business of the master LLC, or may conduct a wholly different business.
  • Each unit has its own assets and liabilities. The members of each unit are treated under the laws of the state where the master LLC is formed as owning an interest in only that unit, and have no rights as members of one unit in the assets or income of any other unit.
  • Each unit is liable only for its own debts and obligations. In general, creditors of one unit may only make claims against the assets of that unit.

We take the position that if each unit has the features listed above under the laws of the state where the series LLC was formed, then each unit will be treated as a separate entity for filing and tax purposes. In that case, the same filing guidelines and estimated taxes that apply to a regular LLC will apply to each unit of a series LLC. If the LLC has elected to be taxed as a corporation, it will follow California corporation filing guidelines and estimated tax requirements, and will be subject to the minimum franchise tax. For more information on LLC filing requirements see FTB Pub 3556.

For related LLC articles see:

Back to October 2011 Tax News