united-states oregon limited-liability-company tax-law
Can an LLC operating agreement specify that one member pays all the taxes?
<p>Is it possible, in an LLC with two members, for all of the taxes to &quot;pass through&quot; to one of the members, resulting in the LLC having no effect on the other member's taxes? The non-tax-paying party does not care about receiving profits, and is only involved because the other member is a minor and there needs to be an adult co-owner to sign contracts.</p>

<p>Under U.S. law, an LLC taxed as a partnership rather than as a corporation (the default rule for multimember LLCs in the U.S.), is a pass through entity that allocates income and expense and tax credits as set forth in its operating agreement. This allocation must have &quot;substantial economic effect&quot; to be valid.</p>
<p>So, if both members receive economic benefit from the company, then they must both have taxes pass through to them in a way that reflects this economic benefit. But, if only one member receives an economic benefit than allocating all taxes to that member is appropriate.</p>
<p>This said, it isn't obvious that the solution proposed is a correct way to deal with the state law issues of the contractual capacity of a minor.</p>
