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The Perils of Using “Units” in LLC Planning (Teleseminar)
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The Perils of Using “Units” in LLC Planning (Teleseminar)

A practical guide to the pitfalls of using units when drafting LLC agreements, how to avoid them, and how to correct them in existing agreements.

When: 06/10/14
1:00 PM to 2:00 PM
Contact: (404) 521-0781

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An 800 number connects you to nationally recognized practice leaders who will speak on important issues and emerging trends in the law. You can also pose your own questions to the speakers. Written materials and other details are emailed in advance to pre-registrants.

The Perils of Using “Units” in LLC Planning - 1 CLE hour

When drafting an LLC operating agreement, virtually the only limitation is the creativity of the drafter.  Economic and management rights and tax benefits can be separately allocated to the LLC’s members in virtually any manner.  To impose some order on this broad flexibility,  attorneys frequently rely on “units,” variously captioned, as a conceptual planning and practical drafting tool to mimic the bundle of rights represented by stock in a corporation. Though easy and seemingly effective, these units do not correspond to anything defined by state organizational or federal income tax law.  This lack of congruence very easily leads to a misallocation of economic and management rights, adverse tax consequences, and clients losing the benefit of their bargain.  This program will provide you with a practical guide to the pitfalls of using units when drafting LLC agreements, how to avoid them, and how to correct them in existing agreements.
  • Dangers of using “units” in LLC agreements to substitute for stock – and the adverse economic, control consequences
  • How “units” in LLCs do not accurately substitute for the complex bundle of economic, tax and management rights of a member
  • Management rights – how “units” overpromise governance rights – and successor rights issues 
  • Economic rights – how “units” often shortchange the financial interests of a member 
  • Tax Issues – how the issuance or sale of units leads to substantially adverse tax outcomes 
  • Identifying unit-based problems in existing LLC agreements – and how to correct them


Leon Andrew Immerman is a partner in the Atlanta office of Alston & Bird, LLP, where he concentrates on federal income tax matters, including domestic and international tax planning and transactional work for joint ventures, partnerships, limited liability companies and corporations. He formerly served as chair of the Committee on Taxation of the ABA Business Law Section and as chair of the Partnership and LLC Committee of the State Bar of Georgia Business Law Section.  He is also co-author of “Georgia Limited Liability Company Forms and Practice Manual” (2d ed. 1999, and annual supplements).  Mr. Immerman received his B.A., magna cum laude, from Carleton College, his M.A. from the University of Minnesota, and another M.A. and his Ph.D. from Princeton University, and his J.D. from Yale Law School.

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