Comment on FR Doc # 2011-30611

I am writing in opposition to the Proposed Regulations (REG-109369-10) regarding when a LLC member will be treated as a limited partner under the passive loss limitations in I.R.C. § 469. Under the Proposed Regulations, this would occur if the LLC member does not have the right to manage the LLC under the LLC operating agreement and applicable state law. As a result, only three of the seven tests for determining material participation would be available to such a LLC member and the LLC member would be precluded from grouping the LLC’s aircraft leasing activities with any other activity. Many LLC's are structured so that they are managed by someone other than a LLC member--an employee, for example--usually for valid business reasons. The Proposed Regulations would arbitrarily withhold important tax benefits for such LLC members without justification. In my opinion, this trap for unwary taxpayers runs counter to Congressional intent and may prove impossible to sustain in the courts, which have not been in accord with the view that LLC members be treated as limited partners. Accordingly, I request that the proposed regulations be revised to prevent this result.