Corporate Law Disavow alleged LLC ownership?

[applesauce2]

Jurisdiction

California

I was given shares in an LLC corporation in 2014, and I received a K1 for this LLC and filed taxes on this basis. The net result on my taxes was a deduction. There are no other documents establishing the LLC – no contract, agreement, etc. Just some notes exchanged here and there with loose agreements. I know, this was Very Bad Idea.

I have not received tax forms for 2015 and I regret accepting the shares from 2014 as I suspect the majority owner is being unethical with tax filings. I would like to nullify and/or disavow my alleged ownership as a mistake. Can I file an addendum to my 2014 taxes saying that I was mistaken and am not actually an owner of the LLC, then pay the difference and any penalties? Or what options do I have to disavow ownership of this alleged corporation?

 

[adjusterjack]

1 - An LLC is not a corporation, it's a limited liability company.

2 - To have any "ownership" interest in the LLC you would have had to have been made a member of the LLC and the LLC manager would have had to file an amendment with the state. I suggest you check the Scty of State's business records to see if anything like that happened.

3 - I suppose, as an individual, you could have been a "partner" with the LLC for some purpose or other.

Anyway, you can certainly file an amended tax return for 2014 correcting the deduction and paying the additional tax and penalty. Nothing wrong with that.

However, I don't think you have to do anything else besides just ignore the LLC. If you haven't received a K-1 for 2015 by now, you probably aren't going to.

 

[Michael Wechsler]

Having an ownership interest in an LLC doesn't necessarily mean that you'd be held personally liable for the misdealings perpetrated by the managing member. And you'd best be sure before you get rid of your ownership. The other members might be glad to take whatever property rights you may have for free.

 

[adjusterjack]

Given Michael's comment I am repeating my comment with emphasis on the last sentence.

2 - To have any "ownership" interest in the LLC you would have had to have been made a member of the LLC and the LLC manager would have had to file an amendment with the state.

I suggest you check the Scty of State's business records to see if anything like that happened.