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Old 04-09-2012, 10:55 AM
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Self Employment Tax

Is an LLC filing 1065 subject to self-employment tax if the only income is from a rental property?



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Old 04-09-2012, 09:51 PM
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“Is an LLC filing 1065 subject to self-employment tax if the only income is from a rental property?”---->I do not think so;you do not file Sch SE on your rental income. you , as a partner of the LLC, need to file Sch SE on your self employment income reported on Sch K-1 of 1065 line 14 with code A. As your business is a multi-member LLC, you should receive a Schedule K-1 reporting your share of the profit. You need to report passive income , rental income, on Sch K1 of 1065 in Box 2 / Sch E of 1040 line28/ 41/ 1040 line 17(your LLC needs to file Form 8825 and report the rental income on SCh K of 1065 line 2 and Sch E). Your LLC pays no taxes, the profit/or loss is a flow thru to the partners, in the form of a K-1 form which is included with your 1065 .Rental income is subject to income tax. Rental income only generates self-employment tax, however, if you "materially participate" in the rental. If you don't do anything for your tenants but basic services -- trash pickup and keeping the common areas of the property clean, for example -- it's a passive investment; if you provide maid service, an onsite laundry or a recreation area, you're providing material participation and you owe self-employment tax.


Last edited by Wnhough : 04-09-2012 at 09:55 PM.


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