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Thank you for your question. Please permit me to assist you with your concerns.
To answer directly, once you transferred stock, you likewise transferred your liability and your tax burden other than the tax implication stemming from the transfer itself. There are no further tax or other liabilities from date of transfer going forward, and you are not liable for further taxes--that would be the responsibility of the new holder of the stock within the LLC and not you.
Hope that helps.
What if the receipiant didn't register the transfer or hasn't filed the corporate taxes since the transfer.
That is a good question. Until the registration takes place, the initial owner remains liable under state requirements. However that party can potentially defend himself with the state if he can provide evidence, such as a signed agreement denoting the transfer took place. Then the burden would be on the LLC but as the obligation to record the transfer is typically on the outgoing member, that LLC member would have to show that he was either limited in nature or did not have the operational duty to record with the state. The recipient has the duty to likewise record, but as there is no proof of transfer, the one who is still listed on documents has to provide evidence that the transfer did take place.
I found out that there is a possibility that the IRS will access a penalty of $4000 for each year that the corporate return was not filed. If I have a signed document of the tranfer, will I still be liable even though I didn't register the transfer ?
Thank you for your follow-up. If you have a signed document of the transfer and proof that it took place (such as receipts), and also hopefully language denoting the other party as responsible for recording the transaction, the IRS would seriously take that into consideration and potentially find you not liable for costs. Right now, however, since your name is XXXXX XXXXX the documentation, you are liable by default so you have the burden of producing evidence and proof that you have not been the owner during the period of time when the returns were not filed.
there is no dispute about the tranfer, and the receipiant is willing to sign something to validate the transfer. Do you think this will be sufficient for the IRS ?
That should be sufficient since all of the parties are claiming that it took place. Just make sure that the recipient signs an affidavit claiming that the transfer took place and that it was his responsibility to record the transfer and with the state that he ended up failing to file. That would invalidate your position and keep you from being pursued by the IRS.
Hope that clarifies.
thanks, XXXXX XXXXX been a big help.
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