LLC's ??

[kentuck]

Limited Liability Companies.

It has been reported that Trump's lawyer, Michael Cohen paid off a porn star thru a LLC? We know that Trump has dozens, perhaps hundreds, of companies registered as "LLC's".

Obviously, these"LLC's" are a major component in these money-laundering operations. So, why can't the Congress do something about LLC's??

Why can they not pass a law to make LLC's more transparent?

Why can they not pass a law that would require all LLC transactions be moved to other types of business models or to show all transactions, with names and dates, of the LLC's?

Why cannot the Congress do away with LLC's completely? Declare them outlaws and punish those that have not obeyed the law?

In my opinion, money-laundering and LLC's are connected at the hip and should be reformed or dismantled.

[Wounded Bear]

1. Good questions all...

I don't think we want to eliminate LLC's entirely, but transparency should be a pre-requisite.

We certainly need to do something there, but there are probably many LLC's that could be traced to government officials of all stripes, and there will be push back, likely from both sides.

[kentuck]

2. No doubt about that.

But hopefully, not the majority of Congress.

[lastlib]

13. I work for one......

Five employees, counting the owner and his wife who does his bookkeeping. Owner is the most honest and fair-minded individual I've ever known in my life. Small landscaping business, absolutely nothing shady.

That said, something needs to be done about the LLCs owned by the Manaforts of the world. (Or more importantly, something needs to be done about the Manaforts of the world.......)

[MineralMan]

3. All of this should be enough to bring Trump down.

The problem is that they're too hard to explain simply to the public. That's the real problem. If we could take it to court, we'd win, but in the court of public opinion, people want simplicity in their scandals.

It's too bad.

[kentuck]

5. You are correct on that, MM...

The public likes "simple".

[Wounded Bear]

7. The simplest thing is transparency...

people are hiding and moving money using these instruments illegally all over the world.

It needs to be cleaned up.

[MineralMan]

15. Yes. I have no doubt that phony LLCs are being used for all sorts

of nefarious purposes. It's a business structure that naturally leads to a lack of transparency. Yet, most LLCs are just fine, and are just using that status to avoid the complexity of forming a corporation.

I'm not sure what the answer is, really. Getting rid of the LLC business organization as an organizational thing probably won't happen. They're relatively transparent to the IRS, but the IRS doesn't disclose tax information about individuals or companies. It can't, by law. Firing up an LLC is easy, cheap and public, but what transactions an LLC engages in isn't public information. Neither are the transactions of many corporations.

The issue here is that it will be very difficult to tie any of this directly to Trump. He has shell companies all over the place, often without his name being present on any of the original filing paperwork. That's why this won't be enough to affect Trump. It's too complicated to be outlined in a headline. And people are barely reading even headlines these days.

It's a real problem, but the real solution isn't simple at all.

[lagomorph777]

19. Simple, as in "The President fucked a porn star while his wife was pregnant?"

That doesn't seem to be simple enough to get any traction.

The Despicable Disposable Deplorables are simpler than simpletons, it seems.

[MineralMan]

20. Trump's philandering won't get him out of office, either.

That only works for Democrats. Republicans can get away with as much extramarital boinking as they want. They've been doing it for decades.

Trump's base celebrates philandering.

[smirkymonkey]

38. Yes, and I NEVER want to hear about Clinton and Monica Lewinsky

ever again after this. That pales in comparison to anything that Trump has done.

[jberryhill]

4. Why can they not pass a law to make LLC's more transparent?

Because corporate formation and governance of corporate entities is a creature of state law, not federal law.

[kentuck]

6. I'm sure Delaware and Wyoming would object.

As would a few other states that have turned into tax havens.

[Wounded Bear]

8. Yeah, Joe Biden's home state...

[kentuck]

10. Unfortunately, yes.

But I don't know that Joe had anything to do with the creation of LLCs?

[ksoze]

9. It's more complicated than that..

LLC's are using extensively by small businesses, trusts, etc.. In most cases because the structure may be more favorable for shareholder tax reasons, etc. Because bad people can exploit them does mean they do not serve a good purpose in building a thriving economy. Trump, et al, will find a way around any corporate structure and the LLC was likely set up because it is easy to do - which is also a benefit to honest small business.

[kentuck]

11. I don"t think small businesses have much of a problem with the transparency...

...so long as they can get the benefit of LLCs. They could be reformed.

[jberryhill]

22. What is it you are suggesting?

What do you mean by "transparency"? My law practice is an LLC, and I'm not opening the books for public review.

You seem to have latched onto this particular form of business organization to be somehow uniquely susceptible to being used for ill purposes than any other form of business organization merely based on the fact that it is a common form.

[HopeAgain]

12. I don't think the fact that they are L.L.C.s has anything to do with the problem

Corporations (or Inc.s) are no more transparent. The United States has recognized legal entities since it's inception. L.L.C.s are a little more lax with regards to corporate requirements, but I don't think that makes them any more effective for carrying on criminal behavior than regular corporations.

[kentuck]

17. If there is no difference, why have them at all?

Yes, LLCs do have some advantages for small businesses but it is pretty obvious that they are being used in money laundering operations.

[HopeAgain]

21. So are banks and corporations used for money laundering.

The reporting requirements are the same for LLC's, corporations and partnerships.

Corporations are subjected to old-fashioned requirements that are nonsensical for small businesses. LLC's have fewer corporate formalities and greater tax flexibility, but that doesn't make it so they can get away with money laundering that corporations cannot.

My point is that the problem is not the type of entity at all.

[kentuck]

24. But one big difference is the anonymity.

The money is much easier disguised under LLCs, don"t you think?

[HopeAgain]

25. For tax ID's there are the same requirements as for corporations.

I don't think there are any additional advantages for anonymity with LLC's. At least not any I am aware of. Corporations have to list at least one officer/Director and LLC's have to list on member, so that's the same.

[jberryhill]

30. How is that different from normal corporations?

Disclosure of that information is not required either in many states, absent a public stock offering.

[panader0]

14. DU is an LLC.....just saying

[kentuck]

16. Yes.

[Kilgore]

18. LLC's are a state creation

Not the Feds.

[kentuck]

23. Congress can pass laws.

Just like they passed Federal marijuana laws. Some states say that is their business and they will approve marijuana if they want. But it is still a Federal law and people can be prosecuted if the Federal government so desires.

[beachbum bob]

26. you would have to change how congress is made up for starters, LLCs are not neccessarily bad

and can have IRS oversight at any time, but like with personal tax structure, your privacy is shielded and can not have info released. Really this is an enforcement issue

[SomethingNew]

27. I don't see any connection.

How is a LLC less transparent than anything else? I cant think if a single reason why an LLC is better for illegal activities.

[regnaD kciN]

28. I own three LLCs...

...one for my photography business, one for my film-production company, and one for a now-dormant software and web development service.

If, as you suggest, LLCs be "outlawed," I would have no choice but to close down all three (and, in particular, to stop offering my photographs for sale and stock use, and to pull my feature film out of distribution). Operating any of these ventures as a sole proprietorship would be exposing myself to far too much risk (in general, I think you have to be nuts to run any business that way today), and running them as full corporations would be financially unfeasible.

[Merlot]

31. Exactly.

" Operating any of these ventures as a sole proprietorship would be exposing myself to far too much risk"

[BoneyardDem]

29. Most States in the USA require members of a newly formed LLC

Last edited Fri Jan 19, 2018, 01:19 PM - Edit history (1)

to list Members or Managing Members at the time the papers are filed. Some states require that those members be listed within 1 year of filing. There is one State, Delaware, that Trump's organization (and in my experience many others) frequently uses to establish their LLC's. Not only because it's a tax haven for that type o entity, but also because that state permits LLC's to live in shadows and never requires a list of the members to be provided to the State for public records.

[Gothmog]

34. Delaware is one of the few states where you do not have to list management

This is the so-called race to the bottom where some states such as Delaware and Nevada compete to be the less restrictive state

[BoneyardDem]

35. While I was updating my post to indicate Delaware, you also provided the clarification

thanks.

And yes, I see a lot of Nevada entities, because of the tax advantages by forming the company entity in that state.

[Gothmog]

36. In Texas you have to file an annual report listing governing persons

[BoneyardDem]

40. What is a red flag to me are n-state LLC's that are owned by another LLC formed in another State

and that foreign LLC, is owned by two LLC's and both LLC's formed in Delaware. So we never get to see the names of the actual Members. The required in-state Agent is a corporation, in the business of registering LLC's, so getting details of the business operations is next to impossible. Almost always it's business activities that are vaguely described and subject to multiple interpretations. I work with local zoning official and details are always necessary for implementation of their Land Use Codes.

[NCTraveler]

32. LLC's provide a vital role for today's economy.

It provides limited protections while still holding corporate status. Handymen, lawn crews, etc are often LLC. They are easy and the individual's don't always have to receive a 1099. It gives some control benefits like a sole proprietorship while affording access to corporate tax laws.

[Gothmog]

33. Limited Liability Companies are just a form of entity

Back in the old days, limited partnerships had to have a general partner with real net worth to qualify as a partnership for tax ruling purposes. Those tax rules went away under "check the box" rules back in 1996 and since then LLCs have become more popular. A LLC is in effect a limited partnership with limited liability for its members or owners without the requirement of having a general partner. Limited partnerships are now being formed with general partners have a zero percentage interest in the limited partnership but still having management rights.

I have been using LLCs for deals for a long while and it now more common to use LLC instead of limited partnerships in many deals. Most of the portfolio companies in oil and gas deals that I represent are LLC in that the sponsors like the flexibility of LLCs. Many real estate deals now use LLCs instead of limited partnerships.

LLC can be single member entities while you always need two entities for a partnership. This helps you structure deals with bankruptcy remote entities that are necessary for Fannie Man and Freddie Mac loans.

Attacking LLC is like attacking trusts, corporations or limited partnerships. It is not the form of entity that is evil but what is being done with the entity.

[Stinky The Clown]

37. By and large LLCs are transparent. Delaware LLCs, not so much.

[Lee-Lee]

39. I dont think you understand what LLCs are at all

I have an LLC I formed when I was offered a chance to do some consulting work for another company part time doing what I do for my regular job.

It’s nothing more than another type of business organization. Doing what I do as a sole proprietorship would be way too risky and not allow the same tax advatantges. What I do isn’t big enough to need to organize as any kind of S-Corp or other corporation.

I will bet almost every small business you interact and do business with every day is an LLC.

And no, there is no need for more “transparency”. My business details are between me, my accountant and the IRS and nobody else. As mentioned DU itself is an LLC- should they be allowed to open their books to every GOP operative?

[BoneyardDem]

41. I think people would be surpised at the very large companies that are forming as LLC instead of Corp

AT&T Mobility LLC., being one. Wal Mart Transportation LLC., Wal Mart.Com USA LLC., and numerous franchisees for well know national chains (7-Eleven and McDonalds for instance)