An Electing Family Limited Liability Entity is defined in Section 40-14A-1, Code of Alabama 1975. Upon meeting certain requirements, an Electing Family Limited Liability Entity would qualify for a maximum Alabama Business Privilege Tax of $500.
To qualify the LLE must be more than 80 percent owned, directly or indirectly, by an individual and the members of the individual’s family (See 40-14A-1(h)(4), Code of Alabama 1975, for attribution rules to follow in determining ownership).
The LLE must have more than 90% of its gross receipts from interest, dividends, rents, and certain other passive income. At least 90% of the adjusted basis of the assets owned by the LLE must consist of cash, stock, securities, timber, annuities, and certain other “non-business” type assets. Again, see Section 40-14A-1, Code of Alabama 1975, for a more thorough explanation of the Electing Family Limited Liability Entity ownership, income, and asset requirements.
A qualifying LLE would make the election to be treated as an Electing Family Limited Liability Entity by completing Schedule BPT-E, Family Limited Liability Entity Election Form, and attaching the completed Schedule to the Alabama Form PPT being filed for the LLE. Page 1, line 17 must be checked to indicate that the election form is attached to the Form PPT. Single-member LLCs that are treated as a disregarded entity for federal income tax purposes do not qualify as an electing family limited liability entity, in accordance with Section 40-14A-1(h), Code of Alabama, 1975.