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Glossary Terms

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Family Limited Partnership (FLP)

A limited partnership created to help protect the family’s real estate and personal assets. Normally, one or both the parents act as the General Partners and place real estate into the FLP. The children are designated as the Limited Partners and contribute no assets to the FLP. Typically, the Limited Partners are not permitted to operate the FLP so the General Partners can maintain control but have a very small ownership percentage. LLCs are now often used to clone FLPs.

Federal Income Tax

Taxation by the U.S. government of the income realized by individuals and entities during a given fiscal or calendar year. LLCs generally pay no U.S. Federal income taxes as the tax liability is passed through to the member’s personal tax returns.

Federal Tax Identification Number

See Employer Identification Number

Franchise Tax

An annual tax levied upon all corporations and LLCs for the privilege of being incorporated or formed in Delaware. Currently all Delaware LLCs pay franchise tax of $250 annually (please note: That amount will be $300 as of July 1, 2014). Make a payment online.

 

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