IRS Issues Private Letter Ruling on ESOPs in LLCs

On September 18, the IRS issued private letter ruling 201538021, which allows limited liability companies to adopt an ESOP under certain circumstances. The PLR clarifies that unit shares of an limited liability company that is classified as an association and that has elected to be taxed as a corporation, are employer securities as defined in in tax code, provided that the unit shares otherwise meet the requirements that they have the highest dividend and voting rights.