Abby Normal Posted June 4, 2018 Report Share Posted June 4, 2018 https://www.journalofaccountancy.com/issues/2018/may/self-employment-taxes-llc-members.html 3 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted June 4, 2018 Author Report Share Posted June 4, 2018 The IRS should have cleared this up years ago by finalizing the proposed regulations. I had an audit of an LLC member who was not active in the business at all, and the IRS agreed with me that the member was not subject to self-employment (SE) tax. The agent told me that the IRS was using a 'facts and circumstances' decision making process for these cases. 2 Quote Link to comment Share on other sites More sharing options...
Pacun Posted June 10, 2018 Report Share Posted June 10, 2018 It sounds interesting that two of the three cases were attorneys. If attorneys' behinds were kicked by the IRS, we have to raise our white flag as soon as the audit starts. But as Abby mentions, the IRS will do it on case by case basis. I always play conservatively and I have always included residual income on line 14 of the K1. I have two cases where I could have not include income on line 14. One case, my client has $120K of guaranteed payments, so adding the extra $20K is not a big deal. On the other case, my client has $40K as guarantee payments, so adding the extra $15k will help him when he retires and he collect SS benefits. Keep in mind that SS benefits are considered on 30 years so each case is different. 1 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted June 11, 2018 Report Share Posted June 11, 2018 3 hours ago, Pacun said: It sounds interesting that two of the three cases were attorneys. If attorneys' behinds were kicked by the IRS, we have to raise our white flag as soon as the audit starts. But as Abby mentions, the IRS will do it on case by case basis. I always play conservatively and I have always included residual income on line 14 of the K1. I have two cases where I could have not include income on line 14. One case, my client has $120K of guaranteed payments, so adding the extra $20K is not a big deal. On the other case, my client has $40K as guarantee payments, so adding the extra $15k will help him when he retires and he collect SS benefits. Keep in mind that SS benefits are considered on 30 years so each case is different. They are actually calculated on the highest 35 years. 2 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted June 11, 2018 Author Report Share Posted June 11, 2018 11 hours ago, Jack from Ohio said: They are actually calculated on the highest 35 years. Adjusted for inflation, too. https://www.ssa.gov/cgi-bin/awiFactors.cgi 2 Quote Link to comment Share on other sites More sharing options...
Pacun Posted June 11, 2018 Report Share Posted June 11, 2018 Thank you for the link and good to know that it is 35 years. 1 Quote Link to comment Share on other sites More sharing options...
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