Avoiding the Investment Company Trap When Forming FLPs and LLCs
Originally appeared in Estate Planning, a Thomson Reuters publication. Copyright 1999 Thomson Reuters/Tax & Accounting.
Although family limited partnerships (FLPs) and limited liabilities companies (LLCs) (sometimes referred to collectively in this article as “FLPs”) are a commonly used estate planning technique, clients, promoters and even some practitioners may be unaware of the investment company rule, which may inadvertently cause taxation on the formation of an FLP.
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