Attorney Thomas B. Burton explains a special IRS rule for multi-member LLCs in Wisconsin where the only members are a married couple.
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Transcript of Video: Special Rule for Married LLC Members in Wisconsin
Today I want to talk about a special
rule for LLC members in a community
property state Wisconsin has community
property or what we call in Wisconsin
marital property that's the system of
marital property between a husband and
wife and it differs from other states
which may not have community property
they have separate property but in
Wisconsin if you're a husband and wife
you can form an LLC and both be members
of that LLC and still be treated as a
disregarded entity for federal tax
purposes if you watch some of my other
videos on LLC's I've talked about the
difference between a multi-member and a
single-member LLC generally if you're
single-member LLC your disregarded
entity meaning the profit and loss can
flow through to your personal income tax
return but if you're a multi-member LLC
you must file form 1065 the federal
partnership return however this is a
great benefit to husbands and wives in
Wisconsin in that they can form an LLC
both be 50/50 members if they want 60/40
whatever they want be equal members in
the business and still file their taxes as
a disregarded entity without incurring
the time and expense of filing that
extra form 1065 partnership tax return
so if you live in Wisconsin and you're a
husband and wife going into business an
LLC can be a great vehicle because you
can still you get the benefits of that
liability protection but you still can
choose to be a disregarded entity which
reduces your ongoing tax compliance
cost so that's a great benefit to
forming an LLC as a husband and wife in
Wisconsin and one that many people don't
know about keep that in mind with
thinking about what business entity
would be the best fit for your new
business. Thank you for watching if you
have a topic for a future video blog
post feel free to submit it
below and I'll try to answer it in
upcoming sessions.
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Transcript and captions provided for ease of access for the hearing impaired.