Legal Question in Business Law in Delaware

I have a less than 1 year old LLC. I have the largest percentage of ownership. One of the other members has just been arrested for tax evasion from many years ago with his personal taxes. I had no idea of his background and have removed him from the corporate bank account. I have also filed a certificate of amendment with the state of Delaware to remove him from the company completely. Is this enough to protect my company from is IRS issues?


Asked on 7/20/10, 1:39 pm

1 Answer from Attorneys
Kevin B. Murphy Franchise Foundations, APC

Any attorney will say you can't retroactively dismiss an LLC member, unless your operating agreement provides for this. The IRS will go after his or her assets, which presumably includes a minority interest in the LLC. The issue becomes what is this interest worth? A minority interest in a new LLC doesn't seem to have any value. Consult with a good business attorney in your area for specific advice.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

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Answered on 7/21/10, 6:59 am


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