Operating Agreement Question

[Colorado LLC]

We have formed an LLC, but have not written out our operating agreement. I
am concerned to make sure that we meet the IRS requirement of lacking two of
the four characteristics of a corporation.

In terms of lacking Free Transferability of Interest: Since we formed in
Colorado, and I have found in Title 7 Article 80 Section 702 of some
Colorado business law publication and which states:

\"...if all of the other members of the limited liability company other
than the member proposing to dispose of his or its interest do not approve
of the proposed transfer or assignment by unanimous written consent, the
transferee of the member\'s interest shall have no right to participate in
the management of the business and affairs of the limited liability company
or to become a member. The transferee shall only be entitled to receive the
share of profits or other compensation by way of income and the return of
contributions to which that member would otherwise be entitled.\"

Is this statement sufficient to establish that we do not have free
transferability of interest? The statement that the transferee would be
entitled to the profits seems to imply limited transferability. Is this
good enough, or do we need to include something further and more restricting
in the operating agreement?

lawyers and visitors here normally do not give tax advice on this site; you may check with the IRS directly; or your accountant; or the H & R Block web site for 20 dollars: HR Block Tax Advisor link --

http://www.hrblock.com/taxes/product...p?productId=44