[WSBARP] Showing my ignorance ( again)

[Eric Nelsen]

Craig—For what it’s worth, I would argue that putting wrong information on a report made to Secretary of State is just wrong information on a report. In order to actually add someone as a member, something further must be done—vote of the members or whatever the operating agreement requires. See RCW 25.15.116<https://app.leg.wa.gov/RCW/default.aspx?cite=25.15.116> on admission of members.

So I think the remedy is to amend the report to make it accurate; and the fact the report named the wrong people as governors should not have an impact on a 1031 exchange.

That said, an annual report might be a “record” of the LLC such that adding someone to the report actually does add them as a member. But it’s not an automatic consequence; I think there might be arguments against that depending on how the LLC is managed.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
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eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Craig Gourley
Sent: Tuesday, May 3, 2022 4:24 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Showing my ignorance ( again)

Thank you.  Based on that definition I see an opportunity for disaster.  People add “Governors” without understanding the consequence.  In a typical Member Managed LLC , adding a Governor is defined as adding a Member.  This results in elimination of the Disregarded Entity status for federal tax purposes, requires filing of a Partnership Tax return and in my fact pattern probably blows a 1031 exchange resulting in several hundred thousand in federal tax liability.   Law of unintended consequences.

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of David Daniel
Sent: Tuesday, May 3, 2022 3:04 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Showing my ignorance ( again)

I believe the term is defined in this context at RCW 23.95.105(12).

David C. Daniel, Attorney
____________________________________
 DEMCO LAW FIRM, P.S.
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Phone| (206) 203-6000
Email | ddaniel at demcolaw.com<mailto:ddaniel at demcolaw.com>
5224 Wilson Ave S #200
Seattle, WA 98118


On Tue, May 3, 2022 at 2:56 PM Craig Gourley <craig at glgmail.com<mailto:craig at glgmail.com>> wrote:
Listmates.  So what exactly is a “ Governor” when it comes to the Secretary of State  and LLCs .  I can not find a definition anywhere.  I currently have people listed as “Governors” telling me that they are not “Members”  and not Managers ( Member Managed LLC).   They claim to have no financial interest but are listed as Governors by the Secretary of State.  I realize that the SOS did not randomly do this and  in this case I know they were added by a family member. Is there any legal ramification to being made a “Governor” or can one randomly add anyone I feel like?



B. Craig Gourley
Gourley Law Group
Snohomish Escrow
The Exchange Connection

1002 10th Street / PO Box 1091
Snohomish, WA 98291

360.568.5065
360.568.8092  fax
Craig at glgmail.com<mailto:Craig at glgmail.com>


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