Tax Considerations in Drafting LLC Operating Agreements

(725 Ratings)

Produced on: December 15, 2017

Course Format On Demand Audio

Taught by


Course Description

Time 61 minutes
Difficulty Advanced

A limited liability company’s operating agreement must address many topics – who are the members and who can become members, how decisions will be made, how the business will be capitalized, and how profits will be shared, just to name a few. But many attorneys fail to appreciate the degree to which the tax treatment of an LLC and its members is driven by the contents of its operating agreement.

In this program, tax and corporate attorney Jason Navarino will discuss the various tax topics that a well-drafted operating agreement should cover, including entity classification for income tax purposes, how to allocate profits and losses in a manner that will be respected by the IRS, tax distributions, withholding and tax reporting obligations, tax issues that arise in the case of transfers, how to deal with audits and tax proceedings, and how to ensure that tax-preferred profits interests are respected as such.

Learning Objectives:

  1. Recognize the differences between classification as a disregarded entity, partnership, and S corporation
  2. Gain familiarity with the forced/target allocation method so that clients can achieve their desired economic deals and still have their tax allocations respected by the IRS
  3. Navigate operating agreement provisions with respect to tax distributions, withholding, tax returns, and audits
  4. Explore the tax issues that arise in connection with membership interest transfers
  5. Identify how to create profits interests that can be issued without exposing the recipient to upfront tax liability


Jason Navarino

Riker Danzig Scherer Hyland & Perretti LLP

Jason D. Navarino is a Partner in Riker Danzig’s Corporate and Tax Groups. He has considerable experience advising both large and small business clients with respect to structuring and documenting domestic and cross-border mergers and acquisitions and joint ventures in a tax-efficient and tax— compliant manner, forming operating and investment partnerships and limited liability companies; managing other related tax and corporate matters and advising clients on their day-to-day business. Mr. Navarino also counsels nonprofit and tax-exempt organizations with respect to tax, corporate, employment and intellectual property matters.

Mr. Navarino has been named as one of the NJBIZ Forty Under 40 recipients for 2016. The Forty Under 40 awards program celebrates the state’s most accomplished young businessmen and women who have been making headlines in their field and who share a commitment to business growth, professional excellence and to the community. In 2015, Mr. Navarino was named a “New Leader of the Bar” by the New Jersey Law Journal. A high honor, the Law Journal selects for this recognition attorneys in their second decade of practice whose achievements in the workplace and public service involvement distinguish them from their peers. Thomson Reuters has included Mr. Navarino on its Super Lawyers “Rising Star” list since 2014.

Mr. Navarino received his J.D. degree from Yale Law School in 2007, where he was Senior Editor of the Yale Law Journal and Director of the Community and Economic Development Clinic and its Small Business Legal Services program. He received his undergraduate degree, summa cum laude, from the Woodrow Wilson School of Public and International Affairs at Princeton University in 2004. He completed his LL.M. degree inTax Law at NewYork University School of Law in May 2013.

Mr.Navarino was elected 1st Vice Chair of theTax Section of the New Jersey State Bar Association in 2017. He has been named Chair of the International Taxation Committee of the New Jersey State Bar Association’s Taxation Law Section. His committee will study and provide information on developments in International Tax Law. Mr. Navarino is also a member of the New Jersey Supreme Court Ad Hoc Committee on Attorney Malpractice Insurance, and is President of the New York Future Problem Solving Program, Inc. as well as Secretary of the Future Problem Solving Program of New Jersey, Inc. Mr. Navarino serves as a Trustee of the Valentine Center for Multiple Disabilities, Inc., and is a member of the Legal,Wealth and Tax Advisory Committee of the Community Foundation of New Jersey.

Mr. Navarino served as a Law Clerk to the Honorable Barry T. Albin, Supreme Court of New Jersey. Prior to joining Riker Danzig, he was an associate at Debevoise & Plimpton LLP in New York, and is admitted to practice law in New Jersey and New York.


David P.

Extremely helpful for my clients' operating agreements that are very complex. I needed this seminar.

Stephen R.

Really outstanding; perhaps best Lawline CLE course I've ever watched. Explained complex concepts clearly and practically.

Thomas M.

Great presentation and delivery.

Harvey K.


Michele B.

Very informative course.

Joseph G.

Knowledgeable, interesting and clear presentation

James R.

very helpful and clearly presented

Paul K.

This guy is a genius. Super clear presentation too.

David A.

A valuable tax overview


Remarkably sophisticated and informative. Well worth listening to.

arthur m.

Nice job

lance f.

very thorough presenter. I am listening to this a second time. Great topic for me

Dem H.

This was a great quick overview of tax considerations in LLC OAs. Impressive.

Paula G.


Kamran M.

Excellent presentation; very useful information for the non-tax lawyer.

Shellie S.

Excellent overview and presentation — really appreciated the emphasis on the most salient points for lawyer-directors.

Michael G.

Great job by presenter. He moved along, had a good level of detail and was engaging.

Ron S.

Good course, good Instructor.

Clint S.

One of the best tax presentations I've ever seen for an audience with a non-tax (real estate) lawyer.

Scott K.

Thank you, Jason!

Elizabeth J.


Vladimir T.

Great speaker

Brian D.

The materials are quite helpful

Caroline P.


Stephanie O.

Very clear explanation of a complicated area; covered a lot of ground in a short period of time.

Stephen L.

Very informative.

Jacqueline K.

Covers a ton of material - very helpful.

Tracy W.

Great speaker. The course was above me, but he did a good job of being clear on complex topics

Dwight B.


Erica B.

The presenter was clear and informative. He explained the material so that even if you didn't have a tax/business background you would be able to understand and follow along and learn.

Dennis G.

Very well done!

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