Aspects of owners management rights-federal income taxation

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Reference no: EM131718678

Your client, Apples & Bananas, Inc., has decided to move forward with the development and manufacture of the iFruitBasket, its next generation data communication device. The iFruitBasket is new, untested technology that will take billions of dollars to develop and may or may not have commercial success. Apples & Bananas is developing the iFruitbasket with JEP Telecom Company. Both Apples & Bananas and JEP Telecom want to have equal power when making decisions regarding the iFruitBasket's development, manufacture, and sale. You advise Apples & Bananas, as well as JEP Telecom Company, to transfer their ownership of the technology and other property associated with the iFruitBasket to a separate limited liability company (LLC) that is equally owned by Apples & Bananas (50% ownership) and JEP Telecom (50%).

Considering only the aspects of owners' management rights, federal income taxation, and transferability of the owners' interests, state why you believe the default characteristics of the limited liability company (LLC) make it an acceptable business form for Apples & Bananas and JEP Telecom to use for development and manufacture of the iFruitBasket.

Reference no: EM131718678

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