Adding a member to an LLC

[Mike Abramowitz]

Currently my partner has properties in his name that have conventional financing, we are looking to transfer these properties into the LLC we are partners in. What type of concerns should we have with transferring these properties, everyone talks about how the transfer into an LLC isn't an issue but what about when its not a single member LLC?

[Logan Allec]

@Mike Abramowitz, are you looking to add a new member to your LLC (post title) or is an existing member looking to contribute his personal property into the LLC (which is what it sounds like from the post itself)?

"As far as the taxes side of things and operating agreement, I'm not concerned with that..."

May I ask why? I'm no attorney, but it's my understanding that if you do not run your business as described in the operating agreement, it could cause your LLC to not be respected in court. Your operating agreement is really all your LLC has, and it's important for LLC owners to run their business in accordance with the LLC agreement.

Also, for tax purposes, if the value that the LLC assigns your partner's property when he contributes it to the LLC differs from his own tax basis in the property, he then has a built-in gain or loss on this property, and this will likely result in unique allocations of depreciation, gain or loss on sale, and other items if you want to keep the IRS out of your hair. Hopefully your operating agreement makes reference to Section 704 of the Internal Revenue Code because this is exactly where it applies.