On May 29, 2015, the New York State Department of Taxation and Finance issued an Advisory Opinion that a membership interest in a single-member LLC (SMLLC) which is disregarded for income tax purposes is not “intangible property” for New York State estate tax purposes. Thus the New York real estate (in this case a condominium) owned by the SMLLC will be included in a of New York State estate of the non-resident decedent who was the LLC member.
Where a SMLLC is disregarded for Federal income tax purposes, it is treated as owned by the individual owner. However, where a SMLLC makes an election to be treated as a corporation, rather than being treated as a disregarded entity, such ownership interest would then be considered intangible property for New York State estate tax purposes and excluded from the estate of a non-resident. (TSB-A-15(1)M)