I’ll try to keep my statements and questions as short and concise as possible. Hopefully someone with the facts can address my comments, questions and concerns to the degree that it will benefit  other business owners who purchased NFA firearms / items through their LLC.

I don’t plan on dying anytime soon, but it’s a daily crap shoot in Dallas traffic.

I am the sole member/owner of a non-firearms related business registered as an LLC. I have several NFA firearms that I purchased through my LLC (no pistols or AOW’s). If I Will the business to my 18 year old son as the sole beneficiary, will he be able to assume and retain ownership of the NFA items?

It’s my understanding that the ATF does not recognize an LLC as an individual, but as an entity; therefore, as the new owner, my son would not be recognized as an individual. If correct, would this exempt my son from filing ATF Form 5 tax exempt transfers for each item? It is also my understanding that there is no specific age requirement for the transfer of NFA items to an individual.

The bottom line: I want my son to operate and retain ownership of my business and all of its assets including my NFA collection when I die. I want to achieve this through the easiest possible legal route while I’m still alive, but I don’t want to take shortcuts that could possibly leave him dealing with a big ATF mess when I’m gone.

NOTE: I realize I can make my son a member of my LLC at the present time and avoid the above concerns, but that would change the business to a partnership. The change to a partnership has greater tax implications involving two individual tax returns as well as business tax returns along with the associated paperwork and CPA fees that I’d rather avoid if at all possible.

Thanks in advance for your advice.

I see no issues with what you are wanting to do. As you noted, the NFA items are registered to the LLC, so having your son inherit the business does not involve a transfer of those items.

Have you thought about making your son a non-member manager of the LLC? That would make him a responsible party and allow him to possess the NFA items.

I'm looking at the same issue now, except my LLC is only a NFA holding company.

^ What he said- although you might need to file amended articles to change to a Manager Managed LLC before appointing Manager(s).

Or you could make him (assuming otherwise qualified to possess NFA items) an authorized agent of the LLC, who (by your action) is immediately authorized to possess Company property.  In your will, you will probably leave him 100% of the Membership Interests of the LLC.

OR

You could amend to make the LLC Manager Managed, appoint yourself as a Manager, appoint your son as a Manager, create a revocable trust now, transfer 100% of the membership interest to yourself as Trustee of the Revocable Trust, have a trust agreement prepared naming the Selttlor of the Trust(you) the Trustee (you) the successor Trustee(s) (Son, brother, etc) and the Benficiaries of the Trust (you, Son, others as you deem appropriate), and when you die the Membership Interest remains held in trust, or vests as directed by the Trust Agreement.

Your accountant/attorney might have some insight on the tax consequences of the devise at your death, versus setting up trust now, relating to the business purposes of the entity.  Tthe NFA stuff would just be along for the ride.

No it is still an LLC. A partnership is something else.

Anyway, it is correct an LLC does not have to xfer the guns as the LLC owner's change hands.

Not a lawyer, but I do have more tax stamps (or my LLC does) than I have postage stamps. All that means is that if I'm wrong about something then I'm wrong a dozen times over.

The LLC is the entity that the NFA items are registered to. You could sell the LLC to a completely unrelated party and there wouldn't be a "transfer" in the eyes of the BATFE.

HOWEVER, I keep my NFA LLC and my business LLC separate. My NFA LLC is set up in a state which doesn't require annual filings or fees, and doesn't need to register as a foreign business in any other state because it conducts no business and has no income from any source. I do pay to maintain a registered agent as I don't have anyone I trust in that state who could do so for free, but that would be an option as well.

My business LLC is registered in my home state, where I also conduct all my business. I'm fortunate that my home state also requires no annual filings or fees (SC) and I can be my own registered agent, so apart from the initial set up cost ($110) I could make as many SC LLCs as I please as well.

[posting two in a row because of 2,000 character limit for new accounts]

In my opinion having registered NFA items is a significant burden on a business that doesn't manifest itself until it's most troublesome. There are a lot of things that can happen to a business that are worlds more time consuming and difficult when dealing with NFA items.

Selling the business? You need to ensure that the new owners WANT the NFA items. All of them. If they don't want the NFA items or can't possess them, then you can't sell the business until paying for the NFA items to be transferred to another entity and waiting however long the time is at that point (try explaining to a waiting buyer that it could be 4-6 months with no status reports or etas) for the approvals.

What if it goes into bankruptcy? You could be forced to sell the NFA items the business owns as assets. Again paying and waiting for transfers.

There are other scenarios that sound less likely (expanding? taking on equity partners?) but are trouble when it comes to handling the NFA items.

My recommendation would be to suck it up and separate your ongoing business and the NFA items. Yes, it's new transfer taxes, but if you are trying to sell a $500,000 business not paying $2k in transfer taxes might mean the difference between having to accept a $490k offer to close in 6mo versus a $510k offer that wants to close immediately.

My thoughts exactly, unless TX is much different than the rest of the country.  You can make your son any % member of the LLC you want.  Just amend the operating agreement however you want.  In no way does it make the LLC a partnership.