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“The power and complexity of the single member limited liability company (“SMLLC”) comes from a conceptual contradiction: the conflation of owner and organization for tax purposes and the separation of owner and entity for non-tax, state law purposes. The contraction has significant practical consequences, which this article explores and illustrates, considering (i) the SMLLC in federal court (single member not permitted to represent the LLC); (ii) the IRS’s tortuous path to determining whether an SMLLC’s sole member is liable for the SMLLC’s unpaid employment taxes (yes; yes vindicated by the courts; then no, as a matter of policy); (iii) transfer taxes on a single member’s contribution of land to the member’s solely-owned LLC (maybe taxable, maybe not); and (iv) whether the membership transfer restrictions built into LLC statutes in order to prevent the separate creditors of an LLC member from intruding into the business of a multi-member LLC ought to be applied to allow a sole member to shelter assets from the claims of the sole member’s legitimate creditors (under advisement by one state supreme court for more than a year). The article concludes that “practitioners must exercise great caution when working with an SMLLC, because, depending on which legal regime applies, the SMLLC may be as visible and substantial as a stone wall, or as diaphanous and subject to disappearance as the Cheshire Cat.”
For the week of 3/8/10 to 3/14/10, the cable TV network rankings were: 1 USA , 2 Fox News, 3 TBS, 4 TNT, 5 History Channel, 13 Cartoon Network, 26 MSNBC and 30 CNN. Maybe the executives at MSNBC and CNN should change their formats to cartoons to get higher ratings and more ad revenue. Many people already think these two networks are a joke.
Question: I have substantial equity in my Arizona home. I know that Arizona has a law called the “homestead exemption” that protects a home owners’ equity in the home. To obtain the protection of Arizona’s homestead exemption, do I have to record or file a document with any governmental agency?
Answer: Arizona Revised Statutes Title 33, Sections 33-1101 – 1105, contain Arizona statutory law for what is commonly called the Arizona homestead exemption. ARS Section 33-1101 states:
A. Any person the age of eighteen or over, married or single, who resides within the state may hold as a homestead exempt from attachment, execution and forced sale, not exceeding one hundred fifty thousand dollars in value, any one of the following:
1. The person’s interest in real property in one compact body upon which exists a dwelling house in which the person resides.
2. The person’s interest in one condominium or cooperative in which the person resides.
3. A mobile home in which the person resides.
4. A mobile home in which the person resides plus the land upon which that mobile home is located.
B. Only one homestead exemption may be held by a married couple or a single person under this section. The value as specified in this section refers to the equity of a single person or married couple. If a married couple lived together in a dwelling house, a condominium or cooperative, a mobile home or a mobile home plus land on which the mobile home is located and are then divorced, the total exemption allowed for that residence to either or both persons shall not exceed one hundred fifty thousand dollars in value.
C. The homestead exemption, not exceeding the value provided for in subsection A, automatically attaches to the person’s interest in identifiable cash proceeds from the voluntary or involuntary sale of the property. The homestead exemption in identifiable cash proceeds continues for eighteen months after the date of the sale of the property or until the person establishes a new homestead with the proceeds, whichever period is shorter. Only one homestead exemption at a time may be held by a person under this section.
The answer to the question of whether a home owner has to record or file anything to perfect the Arizona homestead exemption is found in Arizona Revised Statutes Section 33-1102.A, which states:
A person who is entitled to a homestead exemption as prescribed by section 33-1101 holds that exemption by operation of law and no written claim or recording is required.
A lawyer discusses what happened when something or somebody sent an email message to hundreds or perhaps thousands of people that said the law firm intended to file a lawsuit against the recipient. The email said:
March 12, 2010
Crosby & Higgins
350 Broadway, Suite 300
New York, NY 10013
To Whom It May Concern:
Enclosed is a copy of the lawsuit that I filed against you in court on March 11, 2010. Currently the Pretrail Conference is scheduled for April 10th, 2010 at 9:30 A.M. in courtroom #33. The case number is 3485934. The reason the lawsuit was filed was due to a completely inadequate response from your company for copyright infrigement that our client Lumberton Trading Company is a victim of. Lumberton Trading Company has proof of multiple Copyright Law violations that they wish to present in court on April 10th, 2010.
Patricia Alston spent a lot of money to become a member of Phoenix Country Club in 2005, but she apparently failed to investigate the club before joining because she sued the Phoenix Country Club for discriminating against women. After becoming a member, Ms. Alston claims she learned that men had certain privileges not given to women such as a men’s grill and men only golf tournaments. Five years after joining the PCC she sued the club to get back the money she paid to become a member. You’d think an intelligent person who was going to pay a lot of money to join an exclusive private social club would have asked a lot of women members and wives of male members about how women members are treated differently than men before joining the club.
This is the second time the Phoenix Country Club has been involved in allegations of sex discrimination in the last few years. In 2007, Arizona Attorney General Terry Goddard did not have enough on his plate so he took it upon himself to correct what he saw was a very serious state-wide issue – the inability of rich white women to eat in the Phoenix Country Club’s men’s grill with the rich white men, even though the club had a food and beverage area that was for women only.
Phoenix Business Journal: “The number of foreclosures may be down in the Phoenix area, but home losses are still driving the region’s housing market, according to the latest Realty Studies report from the W. P. Carey School of Business at Arizona State University.”
Law Practice Today has an article by Attorney Dennis Kennedy called “Estate Planning for Your Digital Assets.” He says, “We are gradually, and grudgingly, learning that our online presence can outlive our physical presence and possibly even take on a life of its own. As we begin to move more of our activities—financial, social, work, leisure, creative—to the Internet, the questions about what happens to our online presence and how we best prepare to handle that have begun to grow in quantity and complexity.”
E-Commerce Law: “the United States District Court for the District of Arizona dismissed a defamation complaint for lack of personal jurisdiction where the defendant published on a website an allegedly defamatory article about the plaintiffs, who reside in Arizona. . . . the Arizona court was unable to exercise specific personal jurisdiction over the defendant because the allegedly defamatory act was not ‘expressly aimed’ at the state of Arizona.” The case is Xcentric Ventures LLC v. Bird.
The Probate Lawyer Blog: “The successful comedian and star of Sanford and Son ([Redd Foxx] whose real name was John Elroy Sanford) died October 11, 1991. Apparently, the Estate has no assets. Even if it did, there’s an outstanding tax bill owed that’s a bit hefty — a whopping $3.6 million as of the day he died.” Despite the apparent lack of assets, there are people fighting over “nothing.”
San Francisco Chronicle: “A judge has awarded a San Francisco attorney $7,000 in damages in a rare trial under California’s anti-spam law – $1,000 for each unsolicited, misleading commercial e-mail he received. The ads violated California’s 2004 anti-spam law . . . . [that] prohibits sending an uninvited commercial e-mail from California, or to a California recipient, that misrepresents either the source or the subject.”
Gizmodo: “One day, you’re going to die. And when you do, you online presence—like your social network profiles, your blog comments, and your web services—will serve as your very first memorial. Here’s how it’ll play out. . . . And Facebook knows this. They’ve got a healthy help section for the bereaved, which lays out what how one can deal with a dead profile. Here are the options:”
Arizona Republic: “More Phoenix-area homeowners are walking away from their mortgage payments, and many more are likely considering it. These are not people losing homes due to severe financial problems. ‘Walking away’ now also describes people who can make their payments but don’t want to because they owe much more than their home is worth.”
CitiMortgages sent a certified mail letter to a borrower that said it would foreclose on the borrower’s home unless he immediately paid $0.00. The letter said, “”To cure the default you must pay the the past due amount of $0.00, including $0.00 in late charges and $0.00 in delinquency related expenses.” I hope the borrower sent the lender a cashier’s check for $0.00 to stop the foreclosure.
The Internal Revenue Service today issued its 2010 “dirty dozen” list of tax scams, including schemes involving return preparer fraud, hiding income offshore and phishing. “Taxpayers should be wary of anyone peddling scams that seem too good to be true,” IRS Commissioner Doug Shulman said. “The IRS fights fraud by pursuing taxpayers who hide income abroad and by ensuring taxpayers get competent, ethical service from qualified professionals at home in the U.S.”
Tax schemes are illegal and can lead to imprisonment and fines for both scam artists and taxpayers. Taxpayers pulled into these schemes must repay unpaid taxes plus interest and penalties. The IRS pursues and shuts down promoters of these and numerous other scams. The IRS urges taxpayers to avoid these common schemes:
Return Preparer Fraud
Hiding Income Offshore
Phishing
Filing False or Misleading Forms
Nontaxable Social Security Benefits with Exaggerated Withholding Credit
The Trust Advisor Blog: “With bank failures running at their highest level in nearly two decades, those holding fiduciary accounts may cause problems for advisors who recommend them should the bank fail. Experts recommend wealth managers conduct due diligence before sending a client to a bank’s trust dept. . . . But until recently, relatively few people worried what would happen if fiduciaries started failing along with banks.”
Law Professor Orin Kerr discusses on The Volokh Conspiracy the 11th Circuit Court of Appeals decision in “Rehberg v. Paulk, that takes a very narrow view of how the Fourth Amendment applies to e-mail. The Eleventh Circuit held that constitutional protection in stored copies of e-mail held by third parties disappears as soon as any copy of the communication is delivered.”
Are law professors over-paid and under-worked? The National Jurist published an article called “Law school faculties 40% larger than 10 years ago,” which summarizes the results of a study that found the following astounding facts:
“the typical teaching load has dropped from five courses a few generations ago to three courses today”
“Professors are spending less time in the classroom”
“the number of deans, librarians and other full-time administrators who teach more than tripled”
“there are twice as many law professors per student today as there were 30 years ago”
After reading the National Jurist article, you will understand why Law Professor Adolf Hitler became so upset when he learned that he must teach a law school class on Fridays.
The Phoenix Real Estate Guy has an excellent post on why Phoenix area home buyers need to understand the market for the area where they intend to buy and should not have unrealistic expectation. He says:
Home buyers on the other hand almost seem to be losing their grip on reality. . . . So what does an average home price in the Phoenix area of $175K mean? Absolutely nothing. You want a home in Phoenix proper? Average price is $132K. Scottsdale? Average price is $639K.
The United States economy is down. Law schools are producing more law school graduates than available new legal jobs. Lawyers like most other segments of the American business world are being laid off and experiencing declining revenue. One backward thinking school has a novel solution to the “we have too many lawyers” problem – produce more lawyers! Northwestern University School of Law is teaming with the College of Law in England to create a program for the College of Law students to get a masters degree from Northwestern University, which would then make the graduates eligible to take the New York bar exam. After 22 weeks of study, the College of Law grads will get a J.D. from Northwestern, something that takes traditional Northwestern students three academic years to obtain. This is more proof that higher education is always about the money at the expense of the students.
“For example, the National Law Journal’s most recent survey of the “NLJ 250” large firms concluded that 13.3 percent of large firm attorneys working in New York City lost their jobs this year [2009]“
“The U.S. Bureau of Labor Statistics recently reported that, when seasonally adjusted, the number of jobs in legal services fell from 1,157,700 in November 2008 to a projected 1,115,900 for November 2009 (a decline of 9.6 percent over the prior year”
“The American Bar Association reports that for students graduating in 2008, the average debt load for those attending private schools was $91,506, while those attending public law schools on average accumulated $59,324 in debt.”
President Obama and the Democrats tacked an amendment on to the Obamacare bill that will kill the private student loan business and make the federal government the sole lender of student loans. This would be a terrible blow to freedom and the beginning of government control of who gets loans and the curriculum taught by schools. Peter Wood has written an excellent article published at the National Association of Scholars that examines why government control of the student loan is bad for education and the country. As an example of the evils of federal control of education, the author cites Title IX of the Education Amendments of 1972 that has been used to eliminate some college sports programs because the colleges could not maintain programs that had an equal number of men and woman. He says:
They [the federal government] succeeded in transforming Title IX from a law against discrimination into a system of quotas. Too many boys playing college sports? The Department of Education will knock your college off the list of institutions eligible to receive federally-guaranteed student loans. . . . In the name of “gender equity,” the government used its financial aid muscle to impose its own agenda on one dimension of college life. . . . . Or consider the Department of Education’s Office of Civil Rights which has more than once used the government’s financial leverage to foster racial preferences in college admissions and hiring.
The Washington Post has a story about an exotic dancer who is suing the club she worked for, The House, claiming that she was an employee, not an independent contractor. Her lawsuit is based on the Federal Fair Labor Standards Act of 1938. Quansa Thompson, whose stage name is “Love,” was able to take home as much as $1,200 a night “entertaining” the club’s patrons.
Tax Girl: “tucked in the middle [of the Housing Assistance Tax Act of 2008] is a new requirement that banks and credit card merchants to report payments to the IRS. . . . . What this means is that taxpayers who have a credit card merchant account, Paypal account or similar account and otherwise meet the criteria will receive form 1099-K from their service provider at the end of the year. The form 1099-K will report the gross amount paid out to the taxpayer with no adjustments for fees or chargebacks (an issue that is, admittedly problematic).” Here’s the 1099-K form:
Overlawyered’s Walter Olson has a great column today called “Exorcising Toyota’s Demons,” which is subtitled “Reviewing the history of tort-bar opportunism and media malfeasance should dispel the Great Toyota Panic of 2010.”
theadvocate.com: “Who Dat suing NFL Properties? And the New Orleans Saints? And the state of Louisiana? Who Dat? Who Dat? Inc. filed suit in federal district court in Baton Rouge, alleging that the defendants wrongly damaged the firm’s right to profit in the weeks leading to the Saints’ Super Bowl championship last month.” See the complaint.
The U.S. Consumer Product Safety Commission is warning consumers that they should immediately stop using children’s metal charm bracelets. Hazard: The bracelets contain high levels of cadmium. Laboratory analysis determined that following a 24-hour incubation in simulated stomach acid, over 20,000 micrograms of cadmium were released from the snowman alone. Cadmium can be toxic if ingested by young children and can cause adverse health effects. Incidents/Injuries: None reported.
Last week I read a blog post on a law professor’s blog in which he notified the world that the University of Alabama law school was starting a new program offering lawyers a masters degree in law (LL.M.) in tax law. Although the law school has offered a masters in tax degree since 1977, this new program will allow students to take all of the courses online over the internet. The ivory tower prof who wrote the post proudly announced not only the beginning of the new law school program, he also linked to a brochure about the new program, linked to a video about the new program, gave the class schedule and an email address at the University of Alabama where people could send messages for more information. Makes me wonder why the prof is shilling so hard for the new program. I suspect he thinks it is wonderful that more young lawyers will be able to go deeper into debt to get a masters degree in tax law. I’ve got news for him, the view from the ivory tower is much different than the view from the trenches where young lawyers must seek employment.
After reading the blog post on the new LL.M. in tax program I submitted a comment to the ivory tower guy’s post that was critical of the new masters in tax program, but he refused to publish my comment . He probably didn’t want anybody to rain on his law school is the greatest thing and masters in tax degrees are the ultimate parade. A few days later I sent the prof a message asking why he would not publish my comment. He didn’t have the courtesy to answer my question. The following is the comment that I submitted to ivory tower guy that he refused to publish as a comment:
Adding a new LL.M. in tax program is absurd at this time. There is no need for more tax LL.M.s I’ve read recently that laws schools are graduating around 70,000 prospective lawyers a year, but the legal market is only hiring 40,000 new lawyers. I have an LL.M. in tax from New York University, and I just don’t see the need for more lawyers with this degree. Continue reading Too Often a Law Degree Today is a Bad Investment
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