A Guidebook for Airport-Airline Consortiums (2014) / Chapter Skim
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Pages 14-23
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From page 14... ...
14 It is important for a consortium to establish itself as a legal entity if the consortium intends to enter into legal contracts with third parties and otherwise engage in business activities. Historically, many consortiums were formed as a loose affiliation of airlines without the use of a legal entity.
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From page 15... ...
Business Entity Selection 15 As illustrated by Figure 1, the overall frequency of consortium formation has increased dramatically in recent years, with 18 consortiums having been formed since 2005. Further, through 1991, all consortiums were formed as corporations.
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16 A Guidebook for Airport-Airline Consortiums a shareholder of a corporation. In general, only individuals may be officers or directors of a corporation.
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Business Entity Selection 17 to generate and distribute substantial profits, the concept of double taxation will make a "C" corporation a less desirable entity choice. Limited Partnership A limited partnership is a legal entity that has at least one general partner and one limited partner.
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18 A Guidebook for Airport-Airline Consortiums keeping and tax returns associated with the limited liability entity serving as the general partner.
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Business Entity Selection 19 set forth in the applicable state statutes governing limited liability companies, the rights and obligations of each member (such as restrictions on the transfer of membership interests or the obligation to make capital contributions to the limited liability company) will be set forth in the operating agreement that is adopted by the members and the managers, if any.
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20 A Guidebook for Airport-Airline Consortiums during their existence or that do not anticipate transferring property into or out of the limited liability company may choose to file this election. Doing so eliminates the requirement that the members report their allocable share of the limited liability company's profits, gain, deduction, and loss on their applicable income tax returns.
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From page 21... ...
Business Entity Selection 21 Additional Legal Entities Additional legal entities that may be considered but are either not used or are less commonly used include the following: • Sole Proprietorship. A sole proprietorship is an unincorporated organization typically owned by one individual.
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22 A Guidebook for Airport-Airline Consortiums At the state level, each state has a corporation code and various bodies of law regarding the other entities listed above. As a result, when forming a legal entity, it will be important to determine in which state the entity will be formed and to locate the relevant state laws relating to such entity.
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From page 23... ...
Business Entity Selection 23 A number of consortiums have been formed as nonprofit corporations. In some cases this structure was selected because the stakeholders understood that the consortium was not intended to make a profit, and believed that it could therefore qualify to be exempt from income taxes.
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