Assume an LLC has 2 owners, each at 50%. The owners mutually agree that one will take 100% ownership to switch the LLC to a disregarded entity, and the other owner will be dropped off completely.
What is the filing process for doing this?
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First, this agreement (member withdrawal) needs to be in writing and in the form of a resolution. Both owners obviously must sign the resolution. You can then file a Form 8832, which will allow you to pay the LLC's taxes (if any) on your Schedule C. |
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It is a good idea to put information in your operating agreement regarding the removal of partners. |
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Combining the other responses here, you should pass a resolution in writing signed by both members and integrate the details of this procedure as a standard part of your operating agreement for any future changes in ownership. |
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