In court, an LLC needs an Attorney

Tom Swartz of New York Legal Update alerted me to this recent development in LLC law:  A New York court has decided that a  New York LLC needs to be represented by an attorney in court.  See his post on the topic and for case information. 

Pursuant to CPLR 321(a), "a party, other than one specified in section 1201 of this chapter, may prosecute or defend  a  civil  action  in  person  or  by attorney, except that a corporation or voluntary association shall appear by attorney . . .. 

Until recently, no one knew if this provision also applied to limited liability companies.  Now a court has held that it does.

Comments

[Mortimer]

Corporations, partnerships and LLCs are **not** prevented from suing in small claims court.

They simply need to be represented by an attorney.

[Imke]

Oops, that shows that I am not a litigator. I took that part out of the post.

Thanks for the correction.

[Brunos]

from §1361 :
......(g) Nonresident alien shareholder—(1) General rule. (i) A corporation having a shareholder who is a nonresident alien as defined in section 7701(b)(1)(B) does not qualify as a small business corporation. If a U.S. shareholder's spouse is a nonresident alien who has a current ownership interest (as opposed, for example, to a survivorship interest) in the stock of the corporation by reason of any applicable law, such as a state community property law or a foreign country's law, the corporation does not qualify as a small business corporation from the time the nonresident alien spouse acquires the interest in the stock. If a corporation's S election is inadvertently terminated as a result of a nonresident alien spouse being considered a shareholder, the corporation may request relief under section 1362(f).

(ii) The following examples illustrate this paragraph (g)(1)(i):

Example 1. In 1990, W, a U.S. citizen, married H, a citizen of a foreign country. At all times H is a nonresident alien under section 7701(b)(1)(B). Under the foreign country's law, all property acquired by a husband and wife during the existence of the marriage is community property and owned jointly by the husband and wife. In 1996 while residing in the foreign country, W formed X, a U.S. corporation, and X simultaneously filed an election to be an S corporation. X issued all of its outstanding stock in W's name. Under the foreign country's law, X's stock became the community property of and jointly owned by H and W. Thus, X does not meet the definition of a small business corporation and therefore could not file a valid S election because H, a nonresident alien, has a current interest in the stock.

Example 2. Assume the same facts as Example 1, except that in 1991, W and H filed a section 6013(g) election allowing them to file a joint U.S. tax return and causing H to be treated as a U.S. resident for purposes of chapters 1, 5, and 24 of the Internal Revenue Code. The section 6013(g) election applies to the taxable year for which made and to all subsequent taxable years until terminated. Because H is treated as a U.S. resident under section 6013(g), X does meet the definition of a small business corporation. Thus, the election filed by X to be an S corporation is valid.

my question is: My wife is a US citizen but non US resident, If I could be considered as a US resident (exemple 2) even if i am not physically resident in USA, could I incorporate a S-Corporation with being an US resident but considered by the taxation authority as a US resident?