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Old 05-23-2016, 08:13 PM
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LLC losses and tax impact

I have an LLC
If I had 2015 losses of $400k, a salary of $200k and paid state and federal taxes of $100k, I am a 50/50 owner, what is my current tax situation?
I reduced 2016 salary to $100k.
Am I due a refund and if so what amount?
Can that be used to pay current 2016 taxes?



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Old 05-24-2016, 02:58 AM
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I have an LLC
If I had 2015 losses of $400k, a salary of $200k and paid state and federal taxes of $100k, I am a 50/50 owner, what is my current tax situation?======> you, as a member will use Sch K-1 to transfer your portion of business profits and losses to your personal income tax return; the amounts will be taxed at the individual rateYou need to report $200Kyou?re your Sch K1 of 1065 and 1040 however, you may claim your losses on your return; aslongas you carry the Pssive Activity Loss, your passive losses from the business activity can generally be used only to offset passive income from other passive activities. Passive losses in excess of your passive income for the year are suspended and carried forward to future years. You can deduct them in future years when and if you have passive income or when and if you sell or otherwise dispose of the activity that generated the suspended losses. Many taxpayers have little or no passive income for years at a time, so their passive losses can remain suspended for years. if you materially participate in it ?because meeting the material participation standard makes it non-passive. you can deduct losses from the activity in the year they are incurredaslongas you have enough income to offset the losses.

UNLESS yu are a regular employee of the LLC,I mean Unless you, as a member meet the requirements of a bona fide employee, any salary the LLC pays you is deemed a profit distribution.
you usually obtain a membership interest in exchange for a promise of future services, you may not receive a salary when performing those services;
Generally, regular payments for services rendered by a member should be treated as "guaranteed payments" by your LLC. Guaranteed payment which is defined as payments to a partner in his or her partner capacity for services or the use of capital if determined without regard to the income of the partnership. The courts have determined that a partner is acting in his or her capacity as a partner when he performs services that are ongoing and integral to the business of the partnership.
What all that gobble-de-goop means is that any regularly scheduled payment to a member of an LLC for services rendered that is not predicated on the LLC's income, such as in the case of salary, should be treated as a guaranteed payment.
The good news for the LLC is that guaranteed payments are deductible by the LLC as business expenses and the net profit of the LLC is reduced by that amount. The bad news for the member receiving the guaranteed payment is that the payment is treated as ordinary income.
As ordinary income, guaranteed payments aren't subject to income tax and FICA tax withholding as a salary would be; instead, guaranteed payments are subject to estimated income taxes and self-employment taxes. What this means is that the LLC saves on FICA taxes but the member has to carry the burden of self-employment taxes.

I reduced 2016 salary to $100k.
Am I due a refund and if so what amount? =====..No refund as said The IRS classifies salary payments and other recurring payments as guaranteed payments you must report $100K guaranteed payment on sch K1 of 1065 and your 1040 and you need to pay quarterly estimated taxes fBecause guaranteed payments aren?t considered wage income, they?re not subject to income tax withholding. Instead, you must make estimated income tax payments each quarter on all funds received through guaranteed payments.you, as a LLC member, must also pay self-employment taxes on all guaranteed payments on your individual taxes.



Can that be used to pay current 2016 taxes?====>as mentioned previously no refund.



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Old 05-24-2016, 08:43 AM
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Join Date: May 2016
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thank you

Want to thank you for the clear and well structured reply. I really appreciate your assistance.



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