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Old 01-31-2017, 09:48 PM
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Can the hours spent by one of the Partners in an LLC be treated as expense

My wife is a partner in a small business. The other partner in her LLC lives in a different city and does not contribute to the day to day operations of the business. Although the partnership is equal, it was agreed that my wife would take a certain amount as admin salary/fee. During the first few months she could not take the admin salary as the business was not generating enough profit. Both partners agreed to consider the unpaid admin fee as arrears.

For tax purposes, can my wife report the arrears as investment? During the next year assuming that the business generates enough profit - these arrears could be reported as income. Any guidance is highly appreciated.



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