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Until the release of Revenue Ruling 88-76, only two states adopted limited liability company legislation, Wyoming in 1977 and Florida in 1982. In 1975, Alaska rejected adoption of the first limited liability company legislation based on concerns regarding the tax classification of a limited liability company. When Revenue Ruling 88-76 resolved those concerns, all fifty states and the District of Columbia adopted legislation by 1996, only eight years later. Revenue Ruling 88-76, however, did not resolve whether a single-member limited liability company should be classified as a sole proprietorship or a corporation. That matter was not resolved until 1997 with the release of the check-the-box regulations. Again, within a few years all states had amended their limited liability company legislation to permit a single-member limited liability company. Further still, while Delaware adopted series limited liability company legislation in 1996, the check-the-box regulations did not address the classification of a series within a limited liability company. Since 1996, only six other states have followed suit. The 2008 release of Private Letter Ruling 200803004 classifying a series in the same manner as any other business entity under the check-the-box regulations signals a potential amendment of those regulations to embrace the series. If so, once again, all remaining states might be expected to provide for a series. . . .
In 1975, the Massachusetts Supreme Judicial Court decided what has since become an iconic case of the law of closely held corporations, Donahue v. Rodd Electrotype Company of New England, Inc. The company, Rodd Electrotype, had been founded by two men. One had died, leaving his stock essentially to his widow. The other founder, getting on in years, sought to have the company buy out his holding to the ultimate advantage of his adult children. Not surprisingly, the widow of the deceased founder saw no reason why company money should redeem the stock of one founder while leaving her to take whatever fate (or that founder’s children) might have in store for her.
She sued, and the Supreme Judicial Court ruled in her favor. In doing so, the court made a historic characterization and announced a rule of law that have together remained at the core of the law of closely held corporations for more than thirty years . . . .