A Delaware Series LLC is only as strong as its Operating Agreement—especially the tax provisions that keep each series separate in the eyes of the IRS and investors. Below is a 2025-focused checklist of the clauses every founder should include (or negotiate) before launching multiple businesses or assets under one master LLC.
Relevant IRC Codes & Definitions
| Code / Guidance | Impact on the Operating Agreement |
|---|---|
| IRS Notice 2010-38 | Each series can be treated as a separate taxpayer; OA must authorize separate books & EINs. |
| IRC §7701 | Defines entity classification; clarity in OA prevents unintended default rules. |
| IRC §704(b) | Requires substantial-economic-effect allocations—spell out profit/loss allocations per series. |
| IRC §752 | Debt allocations within and across series (keeps partners’ basis accurate). |
| IRC §168(g) | Separate depreciation elections may be made by each series owning depreciable assets. |
IRS & State Form References
| Item | Why It Must Be Addressed in the OA |
|---|---|
| EIN Applications | Each series needing its own EIN must be authorized in the agreement. |
| Form 1065 / 1120 | OA should specify which series file separate returns and who signs. |
| BOI Reporting | Identify “company applicants” and “beneficial owners” per series to satisfy FinCEN rules. |
Real-World Example
Case Study: StratStack Series LLC
- Series A: Consulting
- Series B: IP licensing
- Series C: Real-estate holdco
Poorly drafted OA pooled all expenses. IRS reclassified Series LLC as a single partnership, voiding asset segregation and causing cross-liability. An amended OA fixed:
- Separate capital accounts
- Distinct tax elections
- Individual EINs
Result: IRS accepted separate returns the next year, restoring liability barriers.
Step-by-Step Tax Clause Checklist
- Series Segregation Clause – Affirms each series is separate for tax/legal purposes.
- Capital Account Maintenance (§704-b compliant) – Per series, not aggregate.
- Profit/Loss Allocation – Define allocations and special allocations by series.
- Tax Elections – Permit each series to choose cash/accrual, §179 expensing, bonus depreciation, etc.
- EIN & Return Authorization – Manager may obtain EINs and sign separate federal returns.
- Debt Allocation (§752) – Outline how liabilities attach to a given series.
- Distribution-Waterfall Article – Prevent cash from one series funding another without documented loan or capital shift.
- Audit Procedures (BBA rules) – Name partnership representative per series.
- BOI & Recordkeeping – Mandate separate ledgers, bank accounts, and FinCEN filings.
- Conversion / Spin-Off Rights – Allow any series to convert into its own LLC or C-Corp for fundraising.
Conclusion
A boilerplate Operating Agreement won’t protect multiple series from IRS collapse or investor skepticism. Build tax-focused clauses now to preserve separate liability, simplify audits, and pave a clean exit path for each business line.
Call to Action
Need a bulletproof Series LLC Operating Agreement with investor-grade tax clauses?
👉 Schedule a drafting session with Anshul Goyal, CPA. Get a CPA-vetted OA that satisfies Delaware law, IRS Notice 2010-38, and future due-diligence.
Disclaimer
This guide is for educational purposes only. Operating-agreement requirements depend on ownership, asset type, and investor demands. Anshul Goyal, CPA EA FCA, is licensed in the U.S., enrolled before the IRS, and a Chartered Accountant in India. Always consult qualified legal counsel and a CPA before adopting or amending any Series LLC Operating Agreement.
FAQs (Top 5 High-Searched)
1. Does a Series LLC need one or multiple Operating Agreements?
One master OA with series-specific exhibits usually suffices.
2. Can each series choose a different fiscal year?
Yes, if justified—but OA must authorize and IRS must approve.
3. Are series allocations respected without separate books?
No. Separate books are mandatory for liability and tax segregation.
4. Who signs a series’ tax return?
Appoint a “manager” or “partnership representative” for each series in the OA.
5. Can a series elect S-Corp status?
Possible, but OA must permit corporate election and ownership limits apply.
About Our CPA
Anshul Goyal, CPA EA FCA has crafted 300+ Series LLC Operating Agreements, saving clients millions in unwanted state filings and preserving investor confidence through iron-clad tax clauses.