Talk:Limited liability company/Archives/2021

Challenging deletions (apparent vandalism) by 73.71.251.64 on 12 October 2021

I'm challenging this edit and this edit. These edits removed neutrally stated and properly sourced information that I had added to this article. The anonymous editor apparently has not read and does not understand the sources cited.

The edits removed two critical passages intended to explain the purpose of the Wyoming LLC statute as originally enacted. The first is this one:

"The Wyoming LLC statute was tailored by the Wyoming Legislature to exploit an important flaw in the Kintner regulations—all six factors were supposed to be of "equal significance". This part of the regulations implied that it might be possible to structure an entity with both limited liability and pass-through tax treatment by meticulously balancing the six factors against each other."

As the cited article points out, it is because of this feature that the Wyoming LLC was so quirky in comparison to later LLC statutes, because the drafters were trying to thread their way through such a tiny needle. The replacement text fails to mention the "equal significance" language and how the six factors were balanced against each other, which was the point of the Wyoming LLC statute. By deleting an adequate explanation for the state legislature's actions, the resulting text inappropriately implies in a strongly biased fashion that the Wyoming Legislature was acting in an irrational manner.

That nasty implication is directly contrary to the cited source. Since there is no good faith reading of the cited source that could support such an interpretation, the edit amounts to clear vandalism of the article.

The previous language correctly conveyed the implication of the cited article that the state of Wyoming was acting in a calculated manner to cleverly exploit a subtle loophole in federal tax regulations.

The anonymous editor seems to have a strong POV bias against the state of Wyoming. (And to be clear, I have no particular fondness for the state of Wyoming, which doesn't have much to commend it besides Yellowstone and Devils Tower; my concern is Wikipedia core policies like WP:NPOV.)

Also, the word "flaw" is NPOV because it correctly implies that as a result of the Wyoming LLC statute, the Kintner regulations were thereby failing to accomplish their intended purpose: to ensure that those businesspeople seeking the protection of limited liability would always have to bear the burden of double taxation (personal income and corporate income taxes). If the IRS had been able to come up with a bulletproof way of accomplishing that purpose, the LLC and LLP would not exist.

The second passage at issue is as follows: "For several years, other states were slow to adopt the LLC form because it was unclear if a Wyoming LLC could get away with being taxed as a partnership under the Kintner regulations."

The anonymous editor reverted my revert of their edit by claiming that 'get away with' is POV language, especially with the hindsight that LLCs were ruled legitimate."

The anonymous editor is exhibiting extreme bias by using the fact that LLCs were later ruled legitimate to retroactively treat them as always legitimate, and therefore, any language that doesn't imply their legitimacy then, now, and forever is POV.

Sorry. History doesn't work that way. Today, principled historians—especially at top-tier research universities—pound into their students that sound, neutral historiography requires historians to respect the actual perspective of historical actors at their moment in time, however ignorant and flawed, and to clearly and carefully distinguish between what we know people actually knew back then versus what we know now.

Which means it's improper to write history in a way that views history as a teleological process of continuous improvement, as if a particular outcome in the end was always the superior outcome and inevitable. That's known as Whig history. Writing that way is widely regarded as a sign of intellectual immaturity.

"Get away with" is NPOV because it accurately and neutrally summarizes the perspective of Americans during the 1970s and 1980s as they looked upon the Wyoming LLC experiment: can Wyoming get away with doing that? If it was so slam-dunk obvious that the Wyoming LLC statute was legitimate under federal law all along, it would not have taken 10 years for other states to follow Wyoming's example. It was only when they saw that yes, the IRS really will let people get away with this, that other states began to tentatively follow in Wyoming's footsteps.

In 1977, American businesspeople were struggling with stagflation and shortages; the national mood was still depressed in the aftermath of the Vietnam War (and the resulting waves of refugees) and the Watergate scandal. And then the lawyers insisted on torturing businesspeople with arcane distinctions between sole proprietorships, partnerships, and corporations.

So why bother to create yet another kind of legal entity with its own bewildering terminology and rules, as a weird hybrid of partnerships and corporations? Answering that question in a clear and neutral fashion was the point of the text that the anonymous editor took out. --Coolcaesar (talk) 17:04, 1 November 2021 (UTC)

It wasn't vandalism, period. There is the possibility (for either of us) to be mistaken without acting in bad faith.

Your insinuation of a bias against Wyoming is odd, since "could get away with" strongly implies that the state knowingly undertook to defy the tax laws. The LLC structure was novel, but (as the prior wording admits) guided by the regulations as they stood. Although the Maynard source does use the words "equal significance" it does not say that all six factors were equally significant, and other sources on the subject (e.g. [1][2][3]) consistently state that equal significance was limited to four of the factors. Hence the structure of the Wyoming law: two characteristics shared between corporations and partnerships, and two that were not, placing an LLC at the threshold of being taxed as a corporation.

As for "why bother": not because "lawyers insisted on torturing businesspeople" or any of those other circumstances, but because particular businesspeople in the oil exploration business wanted the law, so that they would have limited liability in the US comparable to what they had elsewhere.

I've updated the wording to restore the mention of equal significance in the regulations, but without referring to this as a "flaw." 73.71.251.64 (talk) 19:29, 2 November 2021 (UTC)

I can't follow this dispute indefinitely. The question of why Wyoming bothered to create the LLC can be answered, and has been answered, without making it out to be some kind of caper. The IRS issued regulations and Wyoming made a law around those regulations for someone's benefit. The IRS might have contested the arrangement in court (as it did with checkbook IRAs, for example) but it did not. 73.71.251.64 (talk) 13:29, 4 November 2021 (UTC)