--- oa_review_kit: v1 guide_slug: wy-formation guide_version: wy-formation@2026-05-27T12:33:27.401Z archetype: formation --- # Review kit: WY Formation Thank you for reviewing this Guide. This kit is one file with three parts: how to use it, an interview prompt for your AI, and the Guide itself. ## How to use this kit (3 steps, about 15 minutes) 1. Open the AI you already use (ChatGPT, Claude, Gemini, anything that reads markdown) and paste in everything from "INTERVIEW PROMPT" below, including the Guide at the end. 2. Your AI interviews you like a colleague, one question at a time. Just talk: war stories, walk-throughs, the mistakes you catch. No writing required. 3. Your AI writes your answers up as a single markdown file. Hand it back at openaccountants.com/skills/wy-formation/handback (also linked from the Guide page: "Hand back your file"). What you added is published under your name and credential. If your AI cannot produce the exact output format, hand back whatever you have: a revised Guide file, a worksheet, or plain notes. We take those too, and a person reviews them by hand. The format below is the one we can apply straight away. --- # INTERVIEW PROMPT (paste from here down into your AI) You are interviewing a practising accountant about how they actually do the work covered by the attached Guide ("WY Formation", slug `wy-formation`). Interview them like a colleague doing a handover. Do not lecture. Ask ONE question at a time and wait for the answer. Chase war stories and specifics: what kind of client, which portal step, how big the penalty was. The rates, thresholds, and citations are our job; we refresh those from primary sources. Capture ONLY what is NOT derivable from law: - order of operations, and what a wrong order corrupts - what to ask a client before computing anything - what to assume when a fact is unknown, and how it gets flagged - the most-missed traps, with penalty size and who falls in - how the portal or filing channel actually behaves - what has to reconcile before anyone signs - when to refuse the work and hand it to a human specialist If the accountant corrects a rate, threshold, or deadline in the Guide along the way, record it in the FACT CORRECTIONS table, but do not steer the interview toward numbers. ## Questions to work through Ask these in order, one at a time. Skip any the accountant has already covered; follow up where a story has specifics worth pinning down. Each question is tagged with the method slot(s) it feeds. 1. [intake_questions] A founder walks in wanting "a company". What do you ask before recommending a structure? 2. [judgment_rule] Tell me about a time the default structure was wrong for someone. What tipped you off? 3. [edge_case] [trap] What do foreign founders never know about local requirements: resident directors, notarised documents, KYC? 4. [filing_mechanics] Walk me through the registration portal itself. Which pieces happen automatically, which need separate applications, and in what order? 5. [trap] What do people set wrong at incorporation that's expensive to fix later? 6. [judgment_rule] Which registrations do you deliberately NOT do at formation, and when do you tell clients to wait? 7. [filing_mechanics] [trap] What's the compliance calendar you set up on day one, especially the deadlines that disqualify directors or deactivate registrations? 8. [evidence] [sequence] What's your first-90-days checklist after the certificate arrives: bank account, share certificates, registers? 9. [trap] Have you seen a company struck off or a director disqualified? What was the chain of misses? 10. [scope_gate] When do you refuse a formation outright? 11. [judgment_rule] What does "we plan to raise money" change about how you set the entity up? 12. [handback_protocol] What's in the formation pack you hand the founder at the end? ## Method slots (for tagging the write-up) - `scope_gate` (Scope gate and refusals): when to stop and send the client to a human - `sequence` (Order of operations): what order to do things in, and what a wrong order corrupts - `intake_questions` (Client intake questions): what to ask a client before computing - `evidence` (Documents and evidence): which documents to insist on, and what is draft-grade vs file-grade - `judgment_rule` (Judgment rules): how a practitioner actually picks when the law allows two routes - `conservative_default` (Conservative defaults): what to assume when a fact is unknowable at draft time - `trap` (Traps and most-missed items): the mistakes everyone makes, what they cost, and who falls in - `filing_mechanics` (Portal and filing mechanics): how submission actually works: channel, order, what locks - `cross_check` (Cross-checks before signing): what has to reconcile with what before delivery, and how close is close enough - `pattern_library` (Pattern library): how messy real-world data (bank lines, payout platforms) maps to tax categories - `edge_case` (Edge-case playbook): the client situations that change the method, not just the numbers - `unsettled_law` (Unsettled-law flags): what not to finalise right now, and why - `handback_protocol` (Hand-back protocol): what the finished working paper contains and who reviews it ## Output format: oa-handback v1 When the interview is done, write the answers up as ONE markdown file in exactly this shape. Fill in the reviewer's real name, credential, and email (ask for them at the end if they have not come up). Every method block gets a `### [method:]` heading where `` is one of the 13 slot ids above. Keep `guide_slug` and `guide_version` exactly as given. Omit any section the interview produced nothing for, but keep the headings that remain exactly as shown. The `fact_key` column may be left blank when unknown. ```markdown --- oa_handback: v1 guide_slug: wy-formation guide_version: wy-formation@2026-05-27T12:33:27.401Z reviewer_name: reviewer_credential: # free text: CPA, EA, ACCA, Steuerberater... reviewer_email: verdict: --- ## METHOD ### [method:filing_mechanics] ### [method:intake_questions] - - ... ## FACT CORRECTIONS | fact_key | current | correct | source | |---|---|---|---| | | | | | ## FLAGS - [unsettled] - [refer] ## NOTES ``` If for any reason you cannot produce this exact format, output the accountant's corrections and methods as clear plain notes instead. The hand-back page accepts plain notes and revised Guide files too; this format is an optimization, never a gate. --- # THE GUIDE UNDER REVIEW --- name: wy-formation description: Tier 2 Wyoming content skill for entity formation covering tax year 2025. Includes the WY LLC $100 filing fee + $60 annual report (cheapest in US), no state PIT, anonymous ownership (member name not on public record), the strongest charging-order asset protection statute in US (charging order as exclusive remedy), Dynasty Trust 1,000-year duration, Series LLC availability, foreign qualification requirements when "doing business" in other states, and the federal compliance overlay (Form 5472 for foreign-owned single-member LLCs). jurisdiction: US-WY domain: formation tax_year: 2025 --- # wy-formation ## 1. Scope This skill covers the formation, maintenance, and strategic use of Wyoming business entities for the 2025 tax year, with a focus on the Wyoming Limited Liability Company (LLC) under the Wyoming Limited Liability Company Act (Wyoming Statutes Title 17, Chapter 29) and the Wyoming Business Corporation Act (Title 17, Chapter 16). It also addresses the Wyoming Statutory Trust Act (Title 17, Chapter 23) and the Wyoming Uniform Trust Code (Title 4, Chapter 10) where dynasty trust planning intersects with LLC structuring. In scope: - Articles of Organization (LLC) and Articles of Incorporation (C-Corp / S-Corp) filing mechanics with the Wyoming Secretary of State. - The Wyoming annual report and license tax under W.S. § 17-29-209 and W.S. § 17-16-1630. - Wyoming's charging-order-as-exclusive-remedy statute under W.S. § 17-29-503. - Anonymous (nominee or "private") ownership patterns and what is and is not on the public record. - Series LLC availability under W.S. § 17-29-211. - Wyoming Dynasty Trust planning under W.S. § 34-1-139's 1,000-year rule against perpetuities. - Comparative analysis: Wyoming vs Delaware vs Nevada. - Foreign qualification under W.S. § 17-29-802 et seq. and reciprocal qualification in other states. - Federal compliance overlay: EIN, Form 5472 + pro-forma 1120 for foreign-owned disregarded single-member LLCs, FinCEN Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act. - Common use cases: real estate holding, holding company umbrella structures, international founders, crypto / digital-asset entities. Out of scope (refer the matter to a credentialed Wyoming attorney or to the relevant specialist skill): - Wyoming Close LLC formation (W.S. § 17-25-101 et seq.) — niche statute. - Wyoming Decentralized Autonomous Organization (DAO) LLC formation under W.S. § 17-31-101 et seq. — covered separately. - Wyoming Private Trust Company formation under W.S. § 13-5-101 et seq. - Wyoming insurance captive formation (Title 26, Chapter 31). - Litigation strategy around piercing the veil or reverse veil piercing. - Federal income tax computation for the LLC's owner — defer to us-sole-prop-bookkeeping, us-schedule-c-and-se-computation, and the federal assembly skill. This skill is a planning aid. Every entity formation, restructuring, or asset-protection plan must be reviewed and signed off by a credentialed adviser — a Wyoming-licensed attorney for legal effect, a CPA or Enrolled Agent under Circular 230 for federal tax effect — before the client files, funds, or relies on the structure. ## 2. Why Wyoming Wyoming is consistently the cheapest, most private, and most asset-protective state in the United States for the formation of a limited liability company. The four pillars below are the reason a disproportionate share of holding companies, asset-protection vehicles, and internationally owned US LLCs are formed in Wyoming rather than in the owner's home state. ### 2.1 No state personal income tax - **No Wyoming personal or corporate income tax** — Wyoming does not impose a personal income tax. Article 15, § 18 of the Wyoming Constitution permits an income tax only by amendment, and no operative tax statute has ever been enacted. There is also no corporate income tax under Title 39 (compare Delaware's 8.7% corporate income tax under 30 Del. C. § 1902 and Nevada's commerce tax under NRS Chapter 363C). Pass-through entities (LLCs taxed as partnerships, S-corporations, sole proprietorships through a single-member LLC) therefore generate no Wyoming entity-level tax and no Wyoming personal income tax on the pass-through share. The only state-level cost of doing business as a Wyoming LLC is the $60 annual report license tax (see § 3.2 below). _(Article 15, § 18 Wyoming Constitution; Title 39)_ - **Wyoming LLC is not a tax shelter for non-Wyoming residents** — A Wyoming-resident sole proprietor who organizes a Wyoming SMLLC and earns $200,000 of net SE income pays $0 in Wyoming income tax. A California-resident sole proprietor in the same fact pattern who organizes a Wyoming SMLLC pays $0 in Wyoming income tax but still pays California personal income tax on the income because California taxes residents on worldwide income under R&TC § 17041 — Wyoming domicile of the LLC does not change the owner's tax home. A Wyoming LLC is not a tax shelter for non-Wyoming residents. It is an entity-formation venue. _(R&TC § 17041)_ ### 2.2 Cheapest LLC in the US - **Wyoming LLC filing fee and annual report license tax** — The Wyoming Secretary of State charges a $100 filing fee for online filing of the Articles of Organization under W.S. § 17-29-1102(a)(2) (the paper filing fee is also $100). The annual report license tax under W.S. § 17-29-209 is the greater of $60 or two-tenths of one mill ($0.0002) per dollar of assets located and employed in Wyoming. For an LLC whose assets in Wyoming are below $300,000 the annual report is the $60 minimum. _(W.S. § 17-29-1102(a)(2); W.S. § 17-29-209)_ **Representative 2025 comparables for an LLC with no Wyoming assets** _(6 Del. C. § 18-1107; R&TC § 17941)_ | State | Filing fee | Annual report / franchise tax | Year 1 cost | Year 2 cost | | --- | --- | --- | --- | --- | | Wyoming | $100 | $60 | $160 | $60 | | Delaware | $90 | $300 (Delaware LLC franchise tax under 6 Del. C. § 18-1107) | $390 | $300 | | Nevada | $75 + $150 initial list + $200 state business license | $150 + $200 | $625 | $350 | | California | $70 | $800 minimum franchise tax under R&TC § 17941 | $870 | $800 | | Texas | $300 | $0 (under franchise tax No Tax Due threshold of $2.47M for 2025) | $300 | $0 | | New York | $200 + ~$1,000+ publication requirement (varies by county) | $9 biennial | ~$1,300 | $9 | | Massachusetts | $500 | $500 | $1,000 | $500 | - **Wyoming cost comparison** — Wyoming is approximately one-fifth the cost of Delaware on a Year-2 basis and approximately one-thirteenth the cost of California. _(§ 2.2 comparison table)_ ### 2.3 Charging-order asset protection - **Charging order as sole and exclusive remedy** — Wyoming's LLC act, W.S. § 17-29-503(a), provides that a charging order is the sole and exclusive remedy by which a judgment creditor of a member or transferee may satisfy a judgment from the judgment debtor's transferable interest. The statute expressly forecloses foreclosure of the interest, judicial sale of the interest, and judicial dissolution as remedies (W.S. § 17-29-503(c)). _(W.S. § 17-29-503(a); W.S. § 17-29-503(c))_ - **Wyoming statute applies equally to single-member and multi-member LLCs** — Wyoming's statute applies equally to single-member LLCs and to multi-member LLCs. This is the critical distinction from Delaware (where the Delaware Court of Chancery has historically narrowed charging-order protection for single-member LLCs in cases such as In re Albright-style analyses) and from many other states. See § 5 below for the full doctrine. _(W.S. § 17-29-503)_ ### 2.4 Anonymous (private) ownership - **Articles of Organization content requirements** — The Wyoming Articles of Organization under W.S. § 17-29-201(b) require only the LLC name, the registered office and registered agent, and the mailing address of the principal office. The names of members and managers are not required on the Articles and are not part of the public record at the Wyoming Secretary of State. _(W.S. § 17-29-201(b))_ - **Annual report filer identification, not members** — The annual report under W.S. § 17-29-209 requires the name and address of the person filing the report (the registered agent or an authorized representative), not the names of members. A Wyoming LLC can therefore be formed and maintained year over year without any beneficial owner's name appearing on the public Secretary of State record. _(W.S. § 17-29-209)_ - **State-level privacy only** — This is state-level privacy only. See § 6 and § 14 for the federal overlay — FinCEN BOI reporting under the Corporate Transparency Act and IRS Form 5472 substantially erode the practical privacy benefit for foreign-owned entities and for any entity that does not qualify for a CTA exemption. _(Corporate Transparency Act; IRS Form 5472)_ ## 3. Wyoming LLC Formation ### 3.1 Articles of Organization — the $100 filing - **Required contents of Articles of Organization** — The Articles of Organization under W.S. § 17-29-201 must contain: 1. The name of the LLC. The name must contain the words "Limited Liability Company," "Limited Company," or one of the abbreviations "LLC," "L.L.C.," "LC," or "L.C." (W.S. § 17-29-108(a)). The name must be distinguishable on the records of the Secretary of State from every other entity name on file (W.S. § 17-29-108(b)). Name availability can be searched at wyobiz.wyo.gov. 2. The street address and mailing address of the LLC's principal office. The principal office need not be in Wyoming. 3. The name and address of the LLC's registered agent in Wyoming (W.S. § 17-28-101 et seq.). The registered agent must be a Wyoming resident or a Wyoming-qualified registered agent service. 4. The name and signature of the organizer. The organizer is the person who signs and files the Articles. The organizer need not be a member. Most registered agent services act as organizer for an incremental fee, which is how anonymous formation is achieved at the filing layer. 5. The mailing address to which the Secretary of State will send the filing acknowledgement. _(W.S. § 17-29-201; W.S. § 17-29-108(a); W.S. § 17-29-108(b); W.S. § 17-28-101 et seq.)_ - **Articles of Organization filing fee** — $100 USD _(W.S. § 17-29-1102(a)(2))_ - **Filing timeline** — Online filing at wyobiz.wyo.gov is the standard route — same-day filing is the norm; the filing is acknowledged within minutes for online submissions in most cases. Paper filing by mail takes 3 to 15 business days depending on workload. _(wyobiz.wyo.gov)_ - **No operating agreement filing requirement** — There is no operating agreement filing requirement. The operating agreement is a private document among the members and is not submitted to the state. This is the principal mechanism by which member names are kept out of public records: members are identified inside the operating agreement, which is retained at the LLC's principal office under W.S. § 17-29-410 but is not public. _(W.S. § 17-29-410)_ ### 3.2 Annual Report — $60 license tax - **Annual report due date** — W.S. § 17-29-209 imposes an annual report obligation. The report is due on the first day of the anniversary month of the LLC's formation. For example, an LLC formed on 14 March 2025 has its first annual report due on 1 March 2026 and every 1 March thereafter. _(W.S. § 17-29-209)_ - **Annual report license tax formula** — Greater of $60 or two-tenths of one mill ($0.0002) per dollar of the LLC's assets located and employed in Wyoming. For an LLC with no Wyoming-situs assets — the typical holding-company fact pattern — the tax is the $60 minimum. _(W.S. § 17-29-209)_ - **Worked example of asset-based annual report tax** — For an LLC with Wyoming-situs assets above $300,000, the formula bites. Example: an LLC holding $5,000,000 of Wyoming-situs real estate pays $5,000,000 × 0.0002 = $1,000. _(W.S. § 17-29-209)_ - **Consequences of failure to file annual report** — Failure to file the annual report by the due date results in: 1. A $50 late penalty. 2. Administrative dissolution under W.S. § 17-29-705 if the report is not filed within 60 days after the due date. _(W.S. § 17-29-705)_ - **Reinstatement of administratively dissolved LLC** — Administratively dissolved LLCs may be reinstated under W.S. § 17-29-707 for up to two years after dissolution, on payment of all back fees plus a $50 reinstatement fee. Reinstatement is generally back-dated to the date of dissolution, which preserves the charging-order shield for the intervening period — but the period of administrative dissolution is precisely the period that creditors will attack. Do not let an LLC go administratively dissolved. _(W.S. § 17-29-707)_ AUDIT FLASH POINT — Missed annual report. An administratively dissolved LLC is, during the dissolution period, an entity without capacity to sue or be sued, without standing to defend a contract, and without the charging-order shield against newly perfected judgments. An asset-protection LLC that lapses on its annual report has, for the period of the lapse, given the creditor a window. Diary the anniversary month for every Wyoming LLC and confirm the registered agent has filed the report. ### 3.3 Registered agent - **Registered agent requirement** — Every Wyoming LLC must continuously maintain a registered agent with a physical Wyoming street address (not a P.O. box) under W.S. § 17-28-101. The registered agent receives service of process and Secretary of State correspondence on behalf of the LLC. _(W.S. § 17-28-101)_ - **Market rates for registered agent services in 2025** — Market rates for a Wyoming registered agent service in 2025 range from roughly $50 to $200 per year. The cheapest tier ($50–$80) typically covers only the statutory agent function; mid-tier services ($100–$150) add formation, anonymous nominee organizer service, and annual report filing; premium services ($150–$200+) add mail forwarding, virtual office, and nominee manager services. _(Market observation, no statutory citation)_ - **Registered agent consent and resignation** — The registered agent must consent in writing to the appointment under W.S. § 17-28-103. Resignation of the registered agent under W.S. § 17-28-107 starts a 31-day clock for the LLC to appoint a successor; failure to do so triggers administrative dissolution. _(W.S. § 17-28-103; W.S. § 17-28-107)_ ### 3.4 Operating agreement (not filed) - **Operating agreement not required but recommended** — W.S. § 17-29-110 permits but does not require a written operating agreement. As a practical matter every Wyoming LLC should have one — the operating agreement governs: Identification of members and their percentage interests. Capital contributions, distributions, and tax allocations. Management structure (member-managed or manager-managed). Transfer restrictions (critical to preserve the charging-order shield — see § 5.4). Buy-sell, drag-along, and dissolution mechanics. Choice of governing law (Wyoming) and forum. _(W.S. § 17-29-110)_ - **Operating agreement not part of public record** — The operating agreement is not filed with the Secretary of State and is not part of the public record. This is the mechanism that keeps member names private at the state level (subject to CTA / BOI federal reporting, see § 14). _(W.S. § 17-29-110)_ ### 3.5 EIN and federal classification - **EIN application process** — After the Articles are filed, the LLC obtains a federal Employer Identification Number (EIN) from the IRS using Form SS-4. A US-resident responsible party with an SSN or ITIN can apply online and receive the EIN immediately. A foreign responsible party without an SSN/ITIN must file Form SS-4 by mail or fax, which takes 4 to 8 weeks (2025 IRS processing times). _(Form SS-4)_ - **Default federal tax classification (check-the-box)** — Default federal tax classification under Treas. Reg. § 301.7701-3 ("check-the-box"): Single-member LLC → disregarded entity. Activity reports on the member's Form 1040, Schedule C (sole prop), Schedule E (rental), or flows up to the corporate parent (if owned by a corporation). Multi-member LLC → partnership, files Form 1065. Election to be taxed as C-corp → file Form 8832. Election to be taxed as S-corp → file Form 2553 (requires all members to be US persons and otherwise eligible under § 1361). _(Treas. Reg. § 301.7701-3; § 1361)_ - **State of formation irrelevant to federal classification** — A Wyoming LLC does not change the federal classification rules. A foreign individual's Wyoming SMLLC is a disregarded entity by default, and the foreign individual remains the US-tax-effective owner of the income earned through the LLC. The state of formation is irrelevant to federal classification. _(Treas. Reg. § 301.7701-3)_ ### 3.6 Same-day filing and expedited service - **Online filing processing time** — Online Articles of Organization at wyobiz.wyo.gov are processed in real time during business hours (Mountain Time, Monday–Friday) and are typically searchable within 30 minutes of filing. Paper filings are processed in the order received. _(wyobiz.wyo.gov)_ - **No paid expedited service** — Wyoming does not currently offer a paid expedited service in the Delaware sense (Delaware's 1-hour, 2-hour, same-day, and 24-hour expedited filings). Online filing is the expedited service. _(wyobiz.wyo.gov)_ ## 4. Wyoming Corporation Formation (C-Corp / S-Corp) Wyoming's Business Corporation Act (Title 17, Chapter 16) governs corporation formation. The filing mechanics mirror the LLC structure. ### 4.1 Articles of Incorporation - **Required contents of Articles of Incorporation** — W.S. § 17-16-202 requires the Articles to contain: 1. Corporate name (must contain "Corporation," "Incorporated," "Company," "Limited," or an abbreviation — W.S. § 17-16-401). 2. Number of authorized shares. 3. Street address of the initial registered office and name of the initial registered agent in Wyoming. 4. Name and address of each incorporator. _(W.S. § 17-16-202; W.S. § 17-16-401)_ - **Articles of Incorporation filing fee** — $100 USD _(W.S. § 17-16-122(a)(1))_ ### 4.2 Annual report — $60 - **Corporation annual report tax** — Greater of $60 or $0.0002 × Wyoming-situs assets, due on the first day of the anniversary month. USD _(W.S. § 17-16-1630)_ ### 4.3 No franchise tax - **Wyoming has no franchise tax on corporations** — Wyoming does not impose a franchise tax on corporations. Compare Delaware, where the franchise tax on a C-corp ranges from a $175 minimum to $200,000 maximum depending on shares outstanding and assumed-par-value calculation under 8 Del. C. § 503. The Wyoming corporation's annual state-level cost is the $60 annual report. _(8 Del. C. § 503)_ ### 4.4 S-corporation election - **S-election is federal, no Wyoming state-level election** — The S-election under § 1361 and § 1362 is a federal election made by filing Form 2553. Wyoming has no state-level S-election because it has no corporate income tax — there is nothing to elect into at the state level. The federal S-election applies in the same way to a Wyoming corporation as to a corporation formed in any other state. For the S-corp planning decision (whether to elect S-corp treatment, the reasonable-salary requirement, the SE-tax savings calculation), refer to us-s-corp-election-decision. _(§ 1361; § 1362; Form 2553)_ ### 4.5 Why Wyoming corporation (vs Delaware corporation) - **When a Wyoming corporation is appropriate vs Delaware** — The dominant choice for VC-backed startups remains Delaware, because institutional investors expect Delaware General Corporation Law (DGCL) governance, the Court of Chancery, and the developed body of Delaware fiduciary-duty case law. A Wyoming corporation is appropriate for: Closely held operating businesses with no immediate plan to raise institutional capital. Holding-company corporations parallel to an LLC umbrella (see § 9). Corporations electing S-corp treatment where the founders want the cost advantage of Wyoming. Wyoming should generally not be used for the entity that will be the target of a Series A or later institutional financing — convert to Delaware before the financing round or organize in Delaware from the outset. _(DGCL)_ ## 5. Charging-Order Asset Protection (W.S. § 17-29-503) This is the single largest reason to form an LLC in Wyoming. ### 5.1 The statute - **W.S. § 17-29-503(a) text** — On application by a judgment creditor of a member or transferee, the court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. _(W.S. § 17-29-503(a))_ - **W.S. § 17-29-503(c) text** — This section provides the exclusive remedy by which a judgment creditor of a member or transferee may satisfy a judgment out of the judgment debtor's transferable interest. No other remedy, including foreclosure on the judgment debtor's transferable interest or a court order for directions, accounts and inquiries that the judgment debtor might have made, is available to the judgment creditor attempting to satisfy the judgment out of the judgment debtor's interest in the limited liability company, and no member or transferee shall be ordered to compel distributions. (Emphasis added.) Read those two phrases carefully — they are the heart of Wyoming's asset-protection franchise. _(W.S. § 17-29-503(c))_ ### 5.2 What a charging order is — and is not - **Charging order definition and creditor limits** — A charging order is a lien on the judgment debtor's economic interest in the LLC. The creditor's rights under the charging order are limited to: Receipt of distributions if and when the LLC makes them to the member. The creditor stands in the shoes of the member for distribution purposes only. No management rights. The creditor does not become a member, does not vote, does not see the books, does not attend meetings, and cannot compel the LLC to make a distribution (W.S. § 17-29-503(c)). No power to dissolve. The creditor cannot force dissolution or liquidation of the LLC. No foreclosure. The creditor cannot foreclose on the membership interest and have it sold at auction. (This is the defining Wyoming feature compared to states where foreclosure remains available.) _(W.S. § 17-29-503(c))_ - **Phantom income and Rev. Rul. 77-137** — The practical consequence is that the creditor is left holding a piece of paper that says "if and when the LLC ever distributes, you get the debtor's share." If the LLC's manager (who in the typical asset-protection structure is not the debtor) chooses not to distribute, the creditor collects nothing. Meanwhile, the LLC's income is reported on the debtor-member's K-1 — and under Rev. Rul. 77-137, the IRS takes the position that the creditor holding a charging order is taxed on the phantom income allocated to the charged interest. The "Rev. Rul. 77-137 problem" — paying tax on income you cannot reach — is the leverage that drives creditor settlements at a fraction of face value. _(Rev. Rul. 77-137)_ ### 5.3 SMLLC application This is where Wyoming materially diverges from other states. In a multi-member LLC, the policy justification for the charging-order remedy is well-settled: the other members should not be forced to accept the creditor as a co-owner against their will. The charging order protects the non-debtor members from involuntary partnership with the creditor. In a single-member LLC, that justification is absent — there are no other members to protect. Several jurisdictions have, in case law or statute, narrowed or eliminated charging-order protection for SMLLCs on that basis. The classic example outside the US is the bankruptcy trustee's argument that an SMLLC interest should be treated as an asset freely available to creditors. Wyoming addressed this question directly. W.S. § 17-29-503(c) makes the charging order the exclusive remedy without distinguishing between single-member and multi-member LLCs. The Wyoming legislature has expressly extended SMLLC charging-order protection on the policy ground that the LLC's separate-entity character justifies the same creditor remedy regardless of the number of members. This is the principal reason a foreign individual or an out-of-state real estate investor forms a Wyoming SMLLC rather than a Delaware, Nevada, or home-state SMLLC. The Wyoming SMLLC offers charging-order-as-exclusive-remedy protection that is statutorily unavailable in most home states. ### 5.4 Operating-agreement features that preserve the shield - **Operating agreement drafting features to preserve charging-order shield** — The Wyoming statute is necessary but not sufficient. The operating agreement must be drafted to maximize the effectiveness of the charging-order shield: Manager-managed structure with a manager other than the debtor — often a trusted family member, professional manager, or trustee. The manager controls distributions. If the debtor is also the manager, some of the leverage is lost because the creditor's argument ("manager debtor was unfairly withholding distributions") becomes available. Distribution discretion vested in the manager, not mandated by a formula tied to the debtor's share. Mandatory distributions effectively give the creditor a claim against the LLC. Transfer restrictions under W.S. § 17-29-502 — the operating agreement should restrict the assignment of membership interests, including involuntary assignments, to discourage a creditor from attempting to argue around the charging order. No personal guarantee by the member of LLC obligations — the charging-order shield does not protect against direct creditors of the LLC, only against creditors of the member. Adequate capitalization and observance of LLC formalities — failure to observe the LLC as a separate entity (commingling, no records, no separate bank account, "alter ego" facts) invites a veil-piercing claim that defeats the charging-order shield entirely. _(W.S. § 17-29-502)_ ### 5.5 Limits — what the charging-order shield does not protect - **Reverse-veil piercing exposure** — Outside reverse-veil piercing. If a creditor of the LLC's manager or a co-member persuades a court that the LLC is the alter ego of the member, the court may "reverse-pierce" and reach LLC assets. Wyoming has not categorically rejected reverse veil piercing. _(Case law, unnamed)_ - **Fraudulent transfer claims** — Fraudulent transfer claims. Under the Uniform Voidable Transactions Act as adopted in Wyoming (W.S. § 34-14-201 et seq.), transfers made with intent to hinder, delay, or defraud creditors can be unwound. An LLC formed and funded after the creditor's claim has matured is the textbook fraudulent transfer; the charging-order shield will not save it. _(W.S. § 34-14-201 et seq.)_ - **Pre-existing tort liability** — Pre-existing tort liability of the member. Forming the LLC after the car accident does not insulate the assets transferred into it. _(General principle, no specific citation)_ - **IRS collection powers override state charging-order statutes** — IRS collection. The IRS's lien and levy powers under § 6321–§ 6334 reach the taxpayer's transferable LLC interest notwithstanding state charging-order statutes (see United States v. Craft, 535 U.S. 274 (2002), and subsequent cases applying the federal-supremacy override to state property-law protections). _(§ 6321–§ 6334; United States v. Craft, 535 U.S. 274 (2002))_ - **Federal criminal forfeiture** — Federal criminal forfeiture. The federal forfeiture statutes reach the LLC interest notwithstanding the charging order. _(Federal forfeiture statutes, unspecified)_ The honest pitch is that the Wyoming SMLLC is leverage-grade protection against civil judgment creditors. It is not a bulletproof shield against the federal government or against properly pleaded fraudulent-transfer claims. ## 6. Anonymous Ownership ### 6.1 What is anonymous - **What is shown on the Wyoming SOS public record** — At the Wyoming Secretary of State level, the public record shows: LLC name. Date of formation. Registered agent name and address. Principal office address. The name of the organizer on the Articles (usually the registered agent service). Annual reports (which name the filer, not the members). _(Wyoming Secretary of State public record)_ - **What is not shown on the Wyoming SOS public record** — The public record does not show: Member names. Manager names (Articles do not require them; the operating agreement contains them). Capital contributions. Membership percentages. Operating agreement contents. A Wyoming Secretary of State search for an entity yields only the registered-agent-curated record, not the beneficial owners. _(Wyoming Secretary of State public record)_ ### 6.2 What anonymity does NOT shield against AUDIT FLASH POINT — Anonymity is a state-level concept only. The federal government, the IRS, FinCEN, banks performing CIP/KYC, and qualified intermediaries in real estate transactions all see through the Wyoming public-record privacy. Do not promise a client "anonymity" without qualifying that the federal disclosure obligations are independent. - **EIN application discloses responsible party** — EIN application. Form SS-4 requires the name and TIN of a "responsible party" — the natural person who exercises ultimate effective control. The IRS sees the beneficial owner. _(Form SS-4)_ - **Form 5472 disclosure requirement (federal overlay)** — Form 5472 (see § 14). A foreign-owned single-member US LLC must file Form 5472 with a pro-forma Form 1120 annually under Treas. Reg. § 1.6038A-1, disclosing the 25% foreign shareholder. _(Treas. Reg. § 1.6038A-1)_ - **FinCEN BOI reporting status** — FinCEN Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act, 31 U.S.C. § 5336. As of the 2024 FinCEN rulemaking and subsequent injunctive litigation, BOI reporting for domestic reporting companies is currently subject to changing enforcement (the March 2025 Treasury announcement narrowed enforcement against domestic entities, but foreign reporting companies remain subject to BOI reporting). Confirm current FinCEN enforcement posture at the time of formation. When in scope, FinCEN BOI requires names, dates of birth, addresses, and ID document images of beneficial owners. FinCEN BOI is not a public register but is available to federal law enforcement, certain federal regulators, and (with consent or court order) to other authorities. _(31 U.S.C. § 5336)_ - **Bank CDD rule beneficial ownership identification** — Bank account opening. US banks must comply with the FinCEN Customer Due Diligence (CDD) rule, 31 C.F.R. § 1010.230, and identify each beneficial owner of 25% or more, plus a control person. The bank sees through Wyoming's public-record privacy. _(31 C.F.R. § 1010.230)_ - **IRS audits and summonses** — IRS audits and summonses. The IRS can summons the operating agreement and member identity directly from the LLC, the registered agent, or the bank. _(IRS summons authority, unspecified)_ - **Civil discovery subpoena exposure** — Civil discovery. A judgment creditor with a subpoena can compel production of the operating agreement and member identities from the registered agent or the LLC. _(Civil discovery, general principle)_ The honest pitch is that Wyoming privacy is public-record privacy. It defeats the casual searcher, the trade-press journalist, the opposing party who has not yet sued and so cannot subpoena, and the adversary screening a public records database. It does not defeat a court order, the IRS, FinCEN, or a bank doing its job. ### 6.3 Use cases where state-level privacy is the right answer Public-figure or high-net-worth client whose property holdings would invite attention if traceable in deed records. Real estate holdings where the LLC's name on the deed is the only public-record link — searching "John Smith LLC" reveals nothing in the SOS database that ties it to John Smith. Founder or investor holding a stake in a sensitive industry (controversial product, political donations, etc.) who wants the state-level link broken. Family office holding cross-portfolio assets. ### 6.4 Nominee organizer and nominee manager - **Nominee organizer definition** — A "nominee organizer" is a person — typically the registered agent service — who signs the Articles of Organization on behalf of the beneficial owner. The nominee is not a member or manager; the nominee's function ends when the Articles are filed. This is permitted and is the standard pattern. The beneficial owner is identified in the operating agreement signed contemporaneously. _(General practice, no specific statutory citation)_ - **Nominee manager definition and fiduciary duties** — A "nominee manager" is a more aggressive pattern in which a third party serves as the LLC's manager of record. This is permitted under Wyoming law but carries fiduciary-duty implications under W.S. § 17-29-409 — a nominee who has signed on as manager owes the LLC fiduciary duties and takes on real exposure. A nominee-manager arrangement should be documented through a separate nominee agreement defining the scope of the nominee's authority, indemnification, and termination rights. _(W.S. § 17-29-409)_ ## 7. Series LLC (W.S. § 17-29-211) - **Series LLC definition and features** — Wyoming permits Series LLCs under W.S. § 17-29-211. A Series LLC is a single LLC that may establish one or more "series" — internal cells — each of which: Has separate assets, liabilities, and members or interests. May have a separate purpose and business. Provides liability separation between series, so that a liability arising in Series A does not reach the assets of Series B, provided that the records of each series are maintained in a manner that reasonably accounts for the assets of that series separately from the assets of the LLC and the other series. _(W.S. § 17-29-211)_ Use cases: - Real estate investor with 12 properties: form 1 Series LLC with 12 internal series, one per property, in lieu of 12 separate LLCs. One annual report, one EIN at the master level, separate operating records per series. - Holding company with multiple lines of business that want internal separation but not the administrative overhead of separate legal entities. - **Series LLC federal tax treatment uncertainty** — Federal tax treatment is unsettled. Prop. Treas. Reg. § 301.7701-1 (proposed in 2010 but never finalized as of 2025) would treat each series as a separate entity for federal tax purposes. Pending final regulations, the federal tax treatment is uncertain, and some practitioners file a separate Form 1065 or Schedule C per series while others treat the master LLC as a single disregarded entity. _(Prop. Treas. Reg. § 301.7701-1)_ ## 7. Series LLC (W.S. § 17-29-211) - **placeholder** — placeholder ## 7. Series LLC (W.S. § 17-29-211) - **State recognition of series LLC is uneven** — State recognition is uneven. Some states (notably California) treat each series as a separate entity for state tax purposes and require each series to qualify and pay its own franchise tax. Forming a Wyoming Series LLC and doing business in California exposes each series to the $800 minimum tax — defeating much of the cost advantage. Confirm the destination-state treatment before adopting the series structure. _(California franchise tax treatment of series, unspecified statute)_ - **Charging-order shield extends to each series** — Charging-order shield within the master. The Wyoming Series LLC statute extends the charging-order protection of W.S. § 17-29-503 to each series, but the case law is thin and the cross-jurisdictional enforcement of inter-series asset separation is not battle-tested. _(W.S. § 17-29-503)_ For most clients the simpler, better-documented pattern is a holding-LLC parent with separate single-member LLC children (see § 9.2 below). The Series LLC is a cost-optimization play for sophisticated multi-asset holders who can tolerate the federal-tax uncertainty. ## 8. Wyoming Dynasty Trust — 1,000-Year Rule - **1,000-year rule against perpetuities exemption** — W.S. § 34-1-139 provides that the common-law rule against perpetuities does not apply to interests in trust, provided the trust is limited to a duration of 1,000 years. _(W.S. § 34-1-139)_ This is one of the longest statutory dynasty-trust durations in the United States. (Several states have abolished the rule against perpetuities entirely or established 360-year, 500-year, or 1,000-year limits; Wyoming is at the top of the durable-trust league.) Use case: a multi-generational asset-protection plan combines a Wyoming LLC (asset-holding vehicle) owned by a Wyoming Dynasty Trust (long-term holding vehicle), with distributions to beneficiaries discretionary under the trustee's authority. The LLC's charging-order shield protects LLC-level assets from a member's creditors; the trust's spendthrift clause protects distributions from a beneficiary's creditors; the 1,000-year duration moves the entire structure outside the typical estate-tax inclusion cycle and the generation-skipping transfer tax exemption planning window. - **Trust as separate taxpayer unless grantor trust** — Tax considerations (federal, not state): The trust is a separate taxpayer (Form 1041) unless structured as a grantor trust under §§ 671–679. _(§§ 671–679; Form 1041)_ - **GSTT lifetime exemption for 2025** — $13.99M per individual for 2025 per IRS Rev. Proc. 2024-40, scheduled to sunset at the end of 2025 unless extended by Congress — confirm current law. USD _(§ 2601; IRS Rev. Proc. 2024-40)_ - **Dynasty trust does not itself reduce federal tax** — The Wyoming Dynasty Trust does not in itself reduce federal estate or income tax; it is a structural vehicle that interacts with the federal transfer-tax regime. Dynasty trust drafting is a specialist task. Refer to a Wyoming-licensed trust and estate attorney. This skill flags the availability and the 1,000-year statute; it does not draft the trust. ## 9. Comparison: Wyoming vs Delaware vs Nevada The three "haven" states are routinely compared. The table below summarizes the planning-relevant differences for 2025. **Comparison: Wyoming vs Delaware vs Nevada** _(W.S. § 17-29-503; 6 Del. C. § 18-703; NRS 86.401; NRS 86.263; W.S. § 17-29-211; 6 Del. C. § 18-215; NRS 86.296; W.S. § 34-1-139; NRS 111.1031; W.S. § 4-10-510; 12 Del. C. § 3570; NRS 166.040; NRS 363C)_ | Feature | Wyoming | Delaware | Nevada | | --- | --- | --- | --- | | LLC filing fee | $100 | $90 | $75 + $150 initial list + $200 business license = $425 first-year fees | | LLC annual cost | $60 | $300 (franchise tax) | $350 ($150 annual list + $200 business license) | | Corp filing fee | $100 | $89 + franchise tax base | $75 + initial list + business license | | Corp annual franchise tax | $60 | $175 minimum, $200,000 max | $350 + commerce tax above $4M revenue | | State income tax | None | 8.7% corporate, 6.6% top personal | None | | Commerce tax / gross receipts | None | None | 0.051%–0.331% above $4M revenue (NRS 363C) | | Charging order — multi-member LLC | Exclusive remedy (W.S. § 17-29-503) | Exclusive remedy (6 Del. C. § 18-703) | Exclusive remedy (NRS 86.401) | | Charging order — SMLLC | Exclusive remedy expressly (W.S. § 17-29-503) | Narrowed in case law for SMLLC | Exclusive remedy expressly (NRS 86.401) | | Anonymity (member name on file) | Not required | Not required | Manager required on initial list | | Anonymity (manager name on file) | Not required | Not required | Required (NRS 86.263) | | Series LLC | Yes (W.S. § 17-29-211) | Yes (6 Del. C. § 18-215) | Yes (NRS 86.296) | | Court system | District Court (no specialist business court) | Court of Chancery — most developed corporate case law in US | Business Court (NRS Chapter 78 disputes) | | Dynasty trust | 1,000 years (W.S. § 34-1-139) | Personal property: no limit; real property: 110 years | 365 years (NRS 111.1031) | | Asset Protection Trust (DAPT) | Yes (W.S. § 4-10-510) | Yes (12 Del. C. § 3570) | Yes (NRS 166.040) | | Investor / VC familiarity | Low | Very high — default Delaware C-corp | Low | ### 9.1 When Wyoming wins Cheapest LLC formation and maintenance. Best statutory SMLLC charging-order protection. Maximum state-level anonymity (Nevada requires manager on the initial list; Wyoming does not). Longest statutory dynasty trust duration. No state-level taxes of any kind for non-resident LLC owners with no Wyoming-situs business activity. ### 9.2 When Delaware wins The entity will accept institutional venture capital. Investors expect Delaware C-corp structure and DGCL governance. The entity is or will be public. The deal team needs Chancery Court adjudication. Cross-border M&A counsel and counterparties are paid to evaluate Delaware law and will charge a premium for any other law. ### 9.3 When Nevada wins The owner is already a Nevada resident and wants to avoid the foreign-qualification step. The structure includes a Nevada asset-protection trust paired with a Nevada LLC for state-of-formation consistency in litigation. The owner has a specific reason — historical relationship, professional preference — to use Nevada. For most planning fact patterns presented to this skill (small business owners, real estate investors, holding companies, international founders, crypto entities), Wyoming is the answer. Delaware is the answer if VC financing is on the roadmap. Nevada is rarely the answer in 2025 because the commerce-tax overlay and the manager-disclosure requirement erode its historical advantages. ## 10. Foreign Qualification — Doing Business in Other States Forming a Wyoming LLC does not confer authority to operate in any other state. If the LLC "does business" in another state, that state requires foreign qualification (sometimes called a "Certificate of Authority" or "Foreign Registration"). ### 10.1 What is "doing business" - **Factors establishing "doing business"** — The standard varies by state. Common factors that establish "doing business" include: Maintaining a physical office, employees, or inventory in the state. Holding real estate in the state. Soliciting and consummating sales in the state on more than an isolated basis. Performing services in the state on a regular basis. Maintaining a bank account is generally not by itself "doing business" but is a factor. Owning intangible property (the LLC's ownership interest in another LLC, securities, etc.) is generally not "doing business" — this is what allows a Wyoming holding LLC to own subsidiaries qualified in their respective states without itself qualifying everywhere. _(General state law standard)_ ### 10.2 The "out-of-state-resident operating from home state" trap AUDIT FLASH POINT — Home-state foreign qualification failure. A California resident forms a Wyoming LLC, runs the business from a home office in Los Angeles, signs contracts from California, and deposits revenue into a California bank. The LLC is doing business in California under R&TC § 23101 and must qualify as a foreign LLC with the California Secretary of State and pay the $800 minimum franchise tax under R&TC § 17941 — exactly the cost the client formed in Wyoming to avoid. Failure to qualify exposes the LLC to back franchise tax, the $2,000 per-year non-qualification penalty (R&TC § 19135), and loss of the right to sue in California courts under Corp. Code § 17708.07. - **Fix for home-state operating LLC trap** — The fix is to either (a) qualify in the home state and accept the home-state cost — in which case the Wyoming formation rarely justifies itself as the operating entity, or (b) form a Wyoming LLC for asset-holding purposes only (e.g., owning a separate operating entity in the home state) and confine business activity to the operating entity. ### 10.3 Mechanics of foreign qualification - **Foreign qualification fee range and requirements** — Each state has its own foreign qualification fee, ranging roughly from $50 (Kentucky) to $500+ (Massachusetts, Texas). The filing typically requires: The Wyoming LLC's name (and a fictitious name if the LLC's name is unavailable in the foreign state). A Certificate of Good Standing from the Wyoming Secretary of State (Wyoming charges $20 for an online certificate; this is sometimes called a Certificate of Existence). The name and address of a registered agent in the foreign state. Annual report obligations in the foreign state thereafter. The Wyoming LLC also remains obligated to file its Wyoming annual report and maintain its Wyoming registered agent. _(General state filing requirements)_ ### 10.4 The pure holding-company pattern (avoids foreign qualification) - **Pure holding-company pattern avoids foreign qualification** — A Wyoming holding LLC that owns 100% of an operating LLC in the operator's home state is generally not "doing business" in the home state, because owning intangible interests is not "doing business." This is the umbrella pattern: ``` Owner (individual) │ ▼ Wyoming Holding LLC (no foreign qualification anywhere) │ ├── California Operating LLC (qualified and operating in CA) ├── Texas Operating LLC (qualified and operating in TX) └── New York Operating LLC (qualified and operating in NY) ``` This pattern preserves the Wyoming charging-order shield at the ownership layer while accepting the home-state cost of the operating layers. The owner-to-Wyoming-Holding-LLC link is the link the charging-order shield protects; a creditor of the individual owner hits the Wyoming charging-order wall at the holding-LLC level. ### 11.1 Facts Jamal is a Texas resident who owns four single-family rental properties: two in Texas, one in Arizona, one in Tennessee. Combined rental net income for 2025 is $58,000. Combined property value is $1,650,000. He wants: Liability separation between properties (a tenant slipping on one property cannot reach the equity in another). Asset protection against personal-life liabilities (auto accident, business creditor of his W-2 employer). Minimum annual cost. Anonymity from skip-trace searches that match deed records to his name. ### 11.2 Structure **Worked Example 1 — Structure table** _(unsourced structure table)_ | Entity | Role | Annual cost | | --- | --- | --- | | Jamal (individual) | Owner | n/a | | Wyoming Holding LLC | Owns 100% of each property LLC | $60 + ~$100 registered agent = $160/yr | | Texas LLC #1 | Owns property A (TX) | $0 franchise tax under TX No Tax Due, but Public Information Report required | | Texas LLC #2 | Owns property B (TX) | $0 + PIR | | Arizona LLC | Owns property C (AZ) | $0 annual report (AZ has no LLC annual report) | | Tennessee LLC | Owns property D (TN) | $300 annual franchise tax minimum | Each property LLC is a single-member LLC, member = Wyoming Holding LLC. Each property LLC is disregarded for federal tax (because its single member, the Wyoming Holding LLC, is itself a disregarded entity in the hands of Jamal). All rental activity flows up to Jamal's Schedule E. ### 11.3 What this achieves Liability separation. A tenant suing the Tennessee LLC has access to the Tennessee property only. The Tennessee LLC's only asset is the Tennessee property. Asset protection from personal creditors. A judgment against Jamal personally — auto accident, etc. — hits the Wyoming charging-order wall at the Holding LLC level. The creditor cannot foreclose on Jamal's interest in the Wyoming Holding LLC and cannot reach through to the underlying property LLCs. Anonymity. Property deeds show "Texas LLC #1" as the owner, not "Jamal." A skip-trace from the Texas SOS shows the Texas LLC is owned by the Wyoming Holding LLC. Wyoming SOS shows no member identification. The link to Jamal is broken at the Wyoming layer (subject to the federal CTA / BOI overlay, see § 14). Cost. Approximately $460/year total state-level cost across all five entities, plus registered agent fees. Compare the alternative of a single California LLC at $800 + LLC fee. ### 11.4 Federal tax All entities are disregarded for federal tax (single-member chain). Jamal reports rental net income on Schedule E. No Form 1065 is filed. EIN obtained for each LLC for banking purposes only. ### 11.5 What this does not achieve No reduction in Texas, Arizona, or Tennessee state-level tax (Texas and Tennessee have no income tax; Arizona requires a state return for the Arizona-situs rental). No protection against federal tax liens on Jamal personally. No protection if Jamal personally guarantees the mortgage on any property (he becomes a direct creditor of the LLC). ### 12.1 Facts Priya is a software engineer who developed a niche SaaS application that generates $180,000 of net revenue in 2025. She is a US citizen resident in Colorado. She is publicly identifiable in her primary career as a senior engineer at a competitor's company and prefers her side-business ownership not be searchable in public records. ### 12.2 Structure **Worked Example 2 — Structure table** _(unsourced structure table)_ | Entity | Role | | --- | --- | | Priya (individual) | Owner | | Wyoming Operating LLC | Operates the SaaS business | | Foreign qualification in Colorado | Required because Priya operates from her Colorado home office | ### 12.3 Analysis - **Colorado foreign qualification requirement and cost** — The Wyoming LLC must foreign-qualify in Colorado because Priya operates the business from a Colorado home office (a Colorado nexus that establishes "doing business" under Colorado law). Colorado foreign qualification fee is $100 and the periodic report fee is $10. Total state cost: $60 (Wyoming) + $10 (Colorado) = $70/yr after first year. _(Colorado state fees, unspecified statute)_ Anonymity: The Wyoming SOS shows no member name. The Colorado Foreign LLC registration shows the LLC's principal office and registered agent. It does not by default show member names. The deeded link from Priya to the LLC exists only in (a) the operating agreement, (b) the EIN application, and (c) the FinCEN BOI report (if currently in force for domestic reporting companies — confirm current enforcement status). A casual search of the Colorado Secretary of State and the Wyoming Secretary of State does not return Priya's name. A subpoena to the registered agent, an IRS summons, or a CTA-authorized BOI access request returns her name. ### 12.4 Federal tax Priya's Wyoming LLC is a disregarded entity. She reports on Schedule C and pays SE tax. If net SE earnings are high enough she may consider an S-election under § 1362 — refer to us-s-corp-election-decision. ### 12.5 What this does not achieve - **Worked Example 2 — Colorado tax not reduced** — Does not reduce Colorado state income tax. Priya remains a Colorado resident and Colorado taxes her on worldwide income under Colo. Rev. Stat. § 39-22-103. The Wyoming formation does nothing to reduce Colorado tax. The benefit is privacy, not tax savings. _(Colo. Rev. Stat. § 39-22-103)_ ### 13.1 Facts Mateo is an Argentine citizen resident in Buenos Aires. He provides software consulting services remotely to US clients and wants to invoice through a US entity for credibility, payment processing (Stripe), and banking. He has no US presence, no US employees, no US office, and no intention to immigrate. ### 13.2 Structure **Worked Example 3 — Structure table** _(unsourced structure table)_ | Entity | Role | | --- | --- | | Mateo (Argentine individual) | Owner | | Wyoming Single-Member LLC | US entity for invoicing and banking | The Wyoming LLC is a disregarded entity by default. Mateo is the beneficial owner. ### 13.3 US tax analysis (the critical part) - **Non-resident alien US taxation categories** — Mateo, as a non-resident alien individual, is taxed by the United States only on: US-source income that is effectively connected with a US trade or business (ECI under § 871(b)), or US-source FDAP income (§ 871(a)), generally subject to 30% withholding unless reduced by treaty. _(§ 871(a); § 871(b))_ - **Source rules for personal services income** — Mateo's facts: He performs all services from Buenos Aires. He has no US office, no US employees, no US fixed place of business. He does not enter the US to perform services. Under § 864 and the source rules of § 861(a)(3), Mateo's personal services income is sourced where the services are performed — Argentina, not the United States. Mateo therefore has no US-source income and no US trade or business, and the Wyoming LLC's invoicing role does not create one (the LLC is disregarded; its activity is Mateo's activity, and Mateo's services are performed abroad). _(§ 864; § 861(a)(3))_ - **Mateo owes no US federal income tax** — Mateo owes no US federal income tax on the consulting revenue. He remains taxable in Argentina under Argentine domestic law (refer to the Argentina skill). _(§ 861(a)(3); § 864)_ ### 13.4 Federal compliance — Form 5472 (the trap) AUDIT FLASH POINT — Form 5472 for foreign-owned SMLLC. Even though Mateo owes no US income tax, the Wyoming SMLLC is a "reporting corporation" under Treas. Reg. § 1.6038A-1(c) because it is a domestic disregarded entity wholly owned by a foreign person. The SMLLC must: 1. Obtain an EIN (Form SS-4 — for a foreign responsible party, file by mail or fax; processing takes 4–8 weeks in 2025). 2. File Form 5472 annually with a pro-forma Form 1120 disclosing the foreign owner and all "reportable transactions" between the LLC and the foreign owner (contributions, distributions, payments, loans). 3. The Form 5472 / pro-forma 1120 is due April 15 of the year following the reporting year (subject to extension on Form 7004). 4. The penalty for failure to file Form 5472 is $25,000 per form per year under § 6038A(d), with an additional $25,000 per 30-day period of continued non-compliance. This is the single most common error in international Wyoming LLC planning. Promoters market the Wyoming LLC as "tax-free" and "anonymous" without disclosing the 5472 obligation. The IRS automatically assesses the $25,000 penalty on examination. - **Form 5472 failure-to-file penalty** — $25,000 per form per year, with an additional $25,000 per 30-day period of continued non-compliance USD _(§ 6038A(d))_ ### 13.5 Federal compliance — FinCEN BOI - **FinCEN BOI applicability to foreign-owned domestic LLC** — If FinCEN BOI reporting is in force at the time of formation, a foreign-owned domestic LLC is a domestic reporting company subject to BOI reporting. The March 2025 Treasury enforcement narrowing was directed at domestic reporting companies with US persons as beneficial owners; foreign reporting companies and foreign-owned domestic reporting companies remain subject to BOI reporting in the most recent guidance. Confirm current enforcement posture and file if required. The penalty for willful non-compliance is up to $500/day and up to $10,000 plus criminal exposure. _(Corporate Transparency Act; FinCEN guidance, March 2025 Treasury enforcement announcement)_ ### 13.6 Banking Opening a US business bank account for a foreign-owned Wyoming LLC is the operational chokepoint. US banks under FinCEN CDD must identify the beneficial owner; many will require Mateo to appear in person, or will require a US-resident authorized signer. Practical options in 2025 include neobanks (Mercury, Relay) that accept fully remote foreign-owned LLC onboarding, traditional banks that require in-person visits, or international banks with US correspondent relationships. ### 13.7 What this achieves Operational US presence for invoicing and payment processing. Credibility with US clients. US bank account in USD. State-level anonymity at the Wyoming SOS layer. ### 13.8 What this does not achieve It is not a tax-free structure. It is a no-US-tax structure because the income is not US-source — but the compliance burden (5472, BOI, EIN, registered agent) is substantial. It does not change Argentine tax. Mateo remains a Argentine resident taxed on worldwide income. It does not provide anonymity from the IRS or FinCEN. It does not protect against Argentine creditors who can establish beneficial ownership. ## 14. Worked Example 4 — Crypto / Digital Asset Holding Entity ### 14.1 Facts Riley is a US-resident crypto investor with a portfolio worth $3.4 million across self-custody hardware wallets, exchange accounts, and a small staking validator. Riley wants: - Liability separation between long-term hold positions and active trading. - Asset protection if a smart-contract counterparty or exchange bankruptcy yields a clawback / litigation exposure. - A privacy layer at the entity level (crypto wallet addresses are pseudonymous on-chain but on-chain analytics services routinely match wallets to identifying patterns). ### 14.2 Structure **Structure** | Entity | Role | | --- | --- | | Riley (individual) | Owner | | Wyoming Holding LLC | Parent | | Wyoming "Long-Term Hold" SMLLC | Self-custody wallets, long-term positions | | Wyoming "Active Trading" SMLLC | Exchange accounts, active trading | | Wyoming "Staking" SMLLC | Validator node, staking rewards | - **Federal tax treatment of the four LLCs** — All four LLCs are disregarded for federal tax (single-member chain). Riley reports all crypto activity on Form 8949 / Schedule D and any staking / mining income on Schedule C or Schedule 1 depending on the trade-or-business analysis. - **Combined annual state-level cost** — Combined annual state-level cost: $60 × 4 = $240 plus registered agent fees. ### 14.3 Wyoming-specific crypto law Wyoming has been an early adopter of digital-asset-friendly legislation: - **Digital asset classification** — Classifies digital assets into three categories (digital consumer assets, digital securities, virtual currency) and explicitly recognizes digital assets as property under Wyoming UCC Article 9. _(W.S. § 34-29-101 et seq.)_ - **Special Purpose Depository Institutions (SPDIs)** — Authorizes Special Purpose Depository Institutions (SPDIs) — Wyoming-chartered banks that may custody digital assets without the deposit-taking activity that triggers federal banking law (Kraken Bank, Custodia Bank are the early charters). _(W.S. § 13-12-101 et seq.)_ - **DAO LLC authorization** — Authorizes Decentralized Autonomous Organization (DAO) LLCs — a separate sub-type of Wyoming LLC with smart-contract-governed operations. (Out of scope for this skill — refer to a Wyoming attorney specializing in DAO law.) _(W.S. § 17-31-101 et seq.)_ - **DAO LLC not required for ordinary crypto-holding LLC** — The DAO LLC is not required for an ordinary crypto-holding LLC. A standard Wyoming SMLLC is the correct vehicle for self-custody and exchange-account holding. ### 14.4 Federal tax considerations - **Crypto as property / realization events** — Crypto is property under Notice 2014-21. Every disposition is a realization event. The LLC layer does not change this — Riley is the tax-effective owner of every disposition. _(IRS Notice 2014-21)_ - **Staking rewards ordinary income** — Staking rewards are ordinary income at the time the rewards are realized and accessible. _(Rev. Rul. 2023-14)_ - **2025 cost-basis tracking / broker reporting rules** — The 2025 cost-basis tracking rules under IRC § 6045 (effective for the 2025 tax year following the IRS finalization of broker reporting regulations in 2024) require brokers to report Form 1099-DA. The Wyoming LLC's exchange accounts will receive 1099-DAs in the LLC's EIN. _(IRC § 6045)_ ### 14.5 What this achieves - Wallet privacy. Public blockchain explorers show the LLC's wallets, not Riley's name. On-chain analytics is harder to tie to identity. (Subject to the standard caveat that any exchange off-ramp KYC reveals identity.) - Liability separation. A hack of one LLC's wallet or a clawback on one LLC's exchange does not reach the other LLCs' assets. - State-level anonymity for the LLC-to-Riley link. - Charging-order protection on each LLC interest. ### 14.6 What this does not achieve - No federal tax avoidance. Every gain, swap, and staking reward flows up to Riley's Form 1040. - No protection from federal tax liens on Riley personally. - No protection from properly pleaded fraudulent transfer claims if Riley already has a known crypto-related creditor (e.g., exchange-bankruptcy clawback claim already on the books). - No FBAR/8938 escape. Foreign exchange accounts remain reportable on FBAR and Form 8938 regardless of the Wyoming LLC layer. ## 15. Common Errors The following errors are seen repeatedly in client matters touching Wyoming LLCs. Flag each one explicitly in the reviewer brief. ### 15.1 Treating Wyoming as a substitute for federal compliance - **Wyoming does not change federal tax obligations** — The single most damaging error. A Wyoming LLC does not change federal tax obligations: - Foreign-owned SMLLC → Form 5472 + pro-forma 1120 required ($25,000 per-form-per-year penalty for non-filing). - Multi-member LLC → Form 1065 required regardless of state of formation. - S-elected LLC → Form 1120-S required. - Any LLC with employees → 941, 940, W-2/W-3 federal employment tax obligations. Marketing copy that says "Wyoming LLC = anonymous, tax-free" is wrong about anonymity (federal disclosure remains) and wrong about tax (the income is still taxable to the owner). ### 15.2 Missing the annual report - **Consequences of missing annual report deadline** — Missing the $60 annual report on its due date triggers a $50 late penalty, and missing it by 60 days triggers administrative dissolution. An administratively dissolved LLC has no charging-order shield during the dissolution period. Diary the anniversary month. ### 15.3 Failing to foreign-qualify in the operating state - **Foreign qualification requirement** — A Wyoming LLC operated from a home office in another state triggers foreign-qualification obligations in that state. Failure to qualify exposes the LLC to back fees, penalties, and loss of standing to sue in that state's courts. See § 10. ### 15.4 Personal guarantees by the member - **Personal guarantees defeat the shield** — The charging-order shield protects the member's interest from personal creditors. If the member personally guarantees the LLC's obligations (lease, line of credit, mortgage), the lender becomes a direct creditor of the member and can reach personal assets — the LLC shield is irrelevant. ### 15.5 Commingling and alter-ego facts - **Veil-piercing risk from commingling** — A Wyoming LLC that does not maintain separate bank accounts, separate books, capital contributions documented in writing, and observed formalities invites a veil-piercing claim. The Wyoming statute provides the strongest charging-order shield in the US — but no statute can overcome a court finding that the LLC was a sham. ### 15.6 Forming the LLC after the claim has matured - **Fraudulent transfer risk** — A Wyoming LLC formed and funded after a claim has matured is a fraudulent transfer under the Uniform Voidable Transactions Act. The shield does not retroactively protect assets transferred in anticipation of a known claim. Asset protection is a planning discipline, not a litigation remedy. _(Uniform Voidable Transactions Act)_ ### 15.7 Promising "anonymity" without qualification - **Correct phrasing for privacy claims** — State-level public-record privacy is real. Federal anonymity is not. The IRS, FinCEN, banks, and subpoenas see through. Phrase every client-facing statement accordingly: "anonymous on the public record" or "private at the state level" — not "anonymous, full stop." ### 15.8 Choosing Wyoming for a VC-track startup - **Delaware preferred for VC-track startups** — If the company will accept institutional venture capital, the correct state of formation is Delaware. Forming in Wyoming and then converting to Delaware before the round adds friction, legal fees, and timing risk. Form in Delaware from the outset if the VC track is the plan. ### 15.9 Series LLC without confirming destination-state recognition - **Series LLC destination-state recognition risk** — Form a Wyoming Series LLC if the assets and members are all in Wyoming or in states that recognize the series structure. California, Massachusetts, and several other states treat each series as a separate entity for state-tax purposes and may require each series to qualify and pay separate franchise tax — defeating the cost optimization. ## 16. Reviewer Brief (Output Template) When this skill is invoked to produce a Wyoming formation plan, the reviewer brief should contain: 1. Client objective — asset protection, tax minimization, privacy, operational US presence, etc. 2. Proposed structure diagram — entities, ownership percentages, states of formation. 3. Formation steps and costs — - Articles of Organization / Incorporation: $100 each. - Annual report: $60 per entity per year. - Registered agent: market rate $50–$200 per year per entity. - EIN application (responsible party identification). - Operating agreement drafting (referred to Wyoming-licensed counsel for any structure beyond a single-member single-purpose LLC). - Foreign qualifications in operating states. 4. Federal compliance overlay — - Form 5472 obligation (if any foreign owner). - FinCEN BOI obligation (confirm current enforcement posture). - Form 1065 obligation (if multi-member). - Employment tax obligations (if any employees). 5. Asset-protection effect — charging-order shield, identified limits, fraudulent-transfer date risk. 6. Privacy effect — what is and is not on the public record, what the federal overlay reveals. 7. Annual maintenance calendar — anniversary month for each entity, responsible person, registered agent renewal dates. 8. Audit flash points — listed explicitly so the reviewer can confirm each one with the client before sign-off. 9. Out-of-scope items referred elsewhere — federal tax computation, home-state income tax, dynasty trust drafting, DAO LLC, captive insurance, etc. ## 17. Self-Checks Before delivering the reviewer brief, confirm: - [ ] Has the federal Form 5472 obligation been flagged if any foreign owner is in the structure? - [ ] Has the FinCEN BOI obligation been confirmed against current enforcement posture and flagged if applicable? - [ ] Has the home-state foreign qualification obligation been analyzed for each operating jurisdiction? - [ ] Has the home-state personal income tax exposure been disclosed (Wyoming formation does not reduce home-state tax for non-Wyoming residents)? - [ ] Has the charging-order shield been analyzed against the specific creditor risk profile (civil judgment creditor vs IRS vs federal forfeiture)? - [ ] Has the operating agreement been flagged as a separate drafting engagement, not produced by this skill? - [ ] Has the annual report calendar been documented with the anniversary month for each entity? - [ ] Has the dynasty-trust structuring (if relevant) been referred to Wyoming trust-and-estate counsel? - [ ] Has the Series LLC's destination-state recognition been confirmed (if a Series LLC is proposed)? - [ ] Has the "Wyoming = tax-free" marketing fallacy been disclaimed in the client brief? ## 18. Provenance This skill draws on the following authorities. Citations are to 2025 versions of the statutes as in force on 1 January 2025 unless otherwise noted. - **Wyoming Limited Liability Company Act** — Wyoming Limited Liability Company Act. _(W.S. § 17-29-101 et seq.)_ - **LLC name requirements** — LLC name requirements. _(W.S. § 17-29-108)_ - **Operating agreement** — Operating agreement. _(W.S. § 17-29-110)_ - **Articles of Organization** — Articles of Organization. _(W.S. § 17-29-201)_ - **Annual report and license tax** — Annual report and license tax. _(W.S. § 17-29-209)_ - **Series LLC** — Series LLC. _(W.S. § 17-29-211)_ - **Standards of conduct for members and managers** — Standards of conduct for members and managers. _(W.S. § 17-29-409)_ - **Records to be kept** — Records to be kept. _(W.S. § 17-29-410)_ - **Transfer of transferable interest** — Transfer of transferable interest. _(W.S. § 17-29-502)_ - **Charging order as exclusive remedy** — Charging order as exclusive remedy. _(W.S. § 17-29-503)_ - **Administrative dissolution** — Administrative dissolution. _(W.S. § 17-29-705)_ - **Reinstatement** — Reinstatement. _(W.S. § 17-29-707)_ - **Foreign LLCs** — Foreign LLCs. _(W.S. § 17-29-802 et seq.)_ - **Filing fees (LLC)** — Filing fees. _(W.S. § 17-29-1102)_ - **Wyoming Business Corporation Act** — Wyoming Business Corporation Act. _(W.S. § 17-16-101 et seq.)_ - **Articles of Incorporation** — Articles of Incorporation. _(W.S. § 17-16-202)_ - **Corporate name requirements** — Corporate name requirements. _(W.S. § 17-16-401)_ - **Filing fees (Corporation)** — Filing fees. _(W.S. § 17-16-122)_ - **Corporate annual report** — Corporate annual report. _(W.S. § 17-16-1630)_ - **Registered Agents Act** — Registered Agents Act. _(W.S. § 17-28-101 et seq.)_ - **Decentralized Autonomous Organizations** — Decentralized Autonomous Organizations. _(W.S. § 17-31-101 et seq.)_ - **Rule against perpetuities — 1,000-year statute** — Rule against perpetuities — 1,000-year statute. _(W.S. § 34-1-139)_ - **Uniform Voidable Transactions Act** — Uniform Voidable Transactions Act. _(W.S. § 34-14-201 et seq.)_ - **Digital Assets Classification** — Digital Assets Classification. _(W.S. § 34-29-101 et seq.)_ - **Wyoming Uniform Trust Code** — Wyoming Uniform Trust Code. _(W.S. § 4-10-101 et seq.)_ - **Wyoming Qualified Spendthrift Trust (DAPT)** — Wyoming Qualified Spendthrift Trust (DAPT). _(W.S. § 4-10-510)_ - **Special Purpose Depository Institutions** — Special Purpose Depository Institutions. _(W.S. § 13-12-101 et seq.)_ - **No income tax without constitutional amendment** — No income tax without constitutional amendment. _(Wyoming Constitution, Article 15, § 18)_ - **S-corporation rules** — S-corporation rules. _(Internal Revenue Code §§ 1361, 1362)_ - **Trade or business definition** — Trade or business definition. _(Internal Revenue Code § 864)_ - **Nonresident alien individual tax** — Nonresident alien individual tax. _(Internal Revenue Code § 871)_ - **Source of personal services income** — Source of personal services income. _(Internal Revenue Code § 861(a)(3))_ - **Foreign-owned domestic reporting corporation reporting** — Foreign-owned domestic reporting corporation reporting. _(Internal Revenue Code § 6038A)_ - **Federal tax lien** — Federal tax lien. _(Internal Revenue Code § 6321)_ - **Property exempt from levy** — Property exempt from levy. _(Internal Revenue Code § 6334)_ - **Broker reporting (1099-DA, 2025 effective date)** — Broker reporting (1099-DA, 2025 effective date). _(Internal Revenue Code § 6045)_ - **Check-the-box classification** — Check-the-box classification. _(Treas. Reg. § 301.7701-3)_ - **Form 5472 reporting** — Form 5472 reporting. _(Treas. Reg. § 1.6038A-1)_ - **Series entity classification (proposed)** — Series entity classification (proposed 2010, not finalized as of 2025). _(Proposed Treas. Reg. § 301.7701-1)_ - **Virtual currency as property** — Virtual currency as property. _(IRS Notice 2014-21)_ - **Charging-order income allocation** — Charging-order income allocation. _(IRS Rev. Rul. 77-137)_ - **Staking reward realization** — Staking reward realization. _(IRS Rev. Rul. 2023-14)_ - **2025 inflation adjustments** — 2025 inflation adjustments. _(IRS Rev. Proc. 2024-40)_ - **Corporate Transparency Act** — Corporate Transparency Act. _(31 U.S.C. § 5336)_ - **Customer Due Diligence Rule** — Customer Due Diligence Rule. _(31 C.F.R. § 1010.230)_ - **FinCEN final BOI rule and enforcement-narrowing guidance** — FinCEN final BOI rule (87 Fed. Reg. 59498, September 30, 2022) and subsequent enforcement-narrowing guidance (Treasury announcement March 2025). _(87 Fed. Reg. 59498)_ - **Federal supremacy of tax-lien reach over state property-law protections** — Federal supremacy of tax-lien reach over state property-law protections. _(United States v. Craft, 535 U.S. 274 (2002))_ - **Delaware Limited Liability Company Act** — Delaware Limited Liability Company Act. _(6 Del. C. § 18-101 et seq.)_ - **Delaware charging order** — Delaware charging order. _(6 Del. C. § 18-703)_ - **Delaware series LLC** — Delaware series LLC. _(6 Del. C. § 18-215)_ - **Delaware LLC franchise tax** — Delaware LLC franchise tax. _(6 Del. C. § 18-1107)_ - **Delaware corporate franchise tax** — Delaware corporate franchise tax. _(8 Del. C. § 503)_ - **Delaware Qualified Dispositions in Trust Act** — Delaware Qualified Dispositions in Trust Act. _(12 Del. C. § 3570)_ - **Nevada LLC** — Nevada LLC. _(NRS Chapter 86)_ - **Nevada manager disclosure** — Nevada manager disclosure. _(NRS § 86.263)_ - **Nevada series LLC** — Nevada series LLC. _(NRS § 86.296)_ - **Nevada charging order** — Nevada charging order. _(NRS § 86.401)_ - **Nevada rule against perpetuities (365 years)** — Nevada rule against perpetuities (365 years). _(NRS § 111.1031)_ - **Nevada spendthrift trust (DAPT)** — Nevada spendthrift trust (DAPT). _(NRS § 166.040)_ - **Nevada commerce tax** — Nevada commerce tax. _(NRS Chapter 363C)_ This skill is a planning aid for tax-year 2025 work. It does not constitute legal advice, does not establish an attorney-client relationship, and does not substitute for review and sign-off by a credentialed Wyoming-licensed attorney and a Circular 230 federal tax practitioner. The Wyoming Secretary of State filing fees and statutory cross-references are current as of the `last_updated` date in the frontmatter; confirm current fees on the Wyoming Secretary of State website before filing.