When most people think of waterfalls, the first thing that comes to mind is likely Niagara or Victoria. Waterfalls in the legal sense are not nearly as breathtaking or awe-inspiring as these natural curtains of water. Nonetheless, when properly drafted, a distribution waterfall in an operating agreement is a fairly impressive provision.

If there was ever any doubt, the U.S. Tax Court has recently clarified that the sole member of a single member LLC can, in certain circumstances, be held liable for the employment tax liability of the entity.

When choice of entity is discussed early in the planning stages for new businesses, C corporations are often quickly taken off the table because of their notorious double taxation. Double taxation refers to the fact that the corporation is taxed on its income at the corporate level, and then its shareholders are taxed on the same income when it is distributed to them in the form of dividends. But double taxation can be mitigated, and in some cases avoided, making it a more viable option.