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The Managing Member manages the capital contributed to the Company through either a general investment fund or a specific investment fund. When an investment is made to the Company, an investor becomes a non-voting member. For the general investment fund, the Managing Member invests the money in any investment areas in order to maximize returns on behalf of members. For the specific investment fund, a member chooses an investment type among various investment opportunities presented by the Company. At the end of each calendar year, a member will receive a Schedule K-1 for his or her individual income tax return. The Schedule K-1 shows the amount of capital contribution and distribution, income, realized investment gain or loss and deductions allocated to a member. Since the Company is on the cash basis of accounting for the tax purposes, any unrealized investment gain or loss is not reflected in the Schedule K-1. This way the capital appreciation will stay tax deferred for years until the investment is actually sold. |
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