I am starting an members-managed LLC with a money partner. In the operating agreement, we have put down that he will be putting in $2000 per month in exchange for half of the ownership, while I will be contributing my 3 properties for the other half of the ownership. How does the IRS view his monetary contribution? Also, when we end the partnership, does the LLC have to give back all his dollar-contribution just as I would expect it would give back my properties? Are there tax issues I should be looking into?
First, if you’ve got 3 properties in and he’s only got $2 grand in, it doesn’t sound like a 50/50 split. You’ve got much more skin in the game and more at risk. you should either have much more take OR put in your own $2k and have the LLC “purchase” the properties from you. That gives you 50% ownership and then BOTH of you owe YOU for the properties.
The LLC doesn’t “give” back anything. It’s a business. It makes or loses money. It pays distributions or it doesn’t. It can sell the property it now ownes or not. But it doesn’t just “give” anything.
Thank you Mark!