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  • 1.  LLC Partners Subject To Social Security

    Bronze Most Valuable Member
    Posted 08-17-2017 10:37 AM
    I interviewed a potential client with 3 partners in an LLC. They were preparing their own taxes and now are seeking professional help. After the interview I concluded they are general partners significantlly involved in day to day operations , decision making etc etc. They never paid SS from their k-1 because they think they are limited partners in an LLC. They reasoned an LLC is by definition is a Limited entity. I advised them they are incorrect and they are all general partners based on my interview and cannot accept the engagement . No passive investment exists. Appreciate any thought or comments

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    Roman A. Bellusci
    ROMAN BELLUSCI, CPA PC
    Floral Park NY
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  • 2.  RE: LLC Partners Subject To Social Security

    Platinum Most Valuable Member
    Posted 08-17-2017 12:34 PM
    Roman:

    I believe their reasoning has no merit whatsoever and that you gave them the correct advice.

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    Robert Brown
    ROBERT N. BROWN, CPA
    Jericho NY
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    Original Message


  • 3.  RE: LLC Partners Subject To Social Security

    Posted 08-18-2017 09:32 AM
    This comes up from time to time and while I agree that the spirit of the arrangement results in income that should be subject to SE tax I would like to be directed to specific guidance on this specific issue.  If it has been tested in court that would be better than the IRS' interpretation.

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    Louis Zacarese
    ShenkerZacarese & Marks LLP
    Rockville Centre NY
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    Original Message


  • 4.  RE: LLC Partners Subject To Social Security

    Gold Most Valuable Member
    Posted 08-18-2017 07:40 AM
    ​It appears from your facts that these individuals were never properly advised in the beginning, nor did they really understand what "LLC" means.

    Your interpretation is correct - by the fact they are active in the day-to-day operations, they are no limited partners, and subject to SE Tax.

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    Neil Fishman CPA
    FISHMAN ASSOCIATES CPAs PA
    Boynton Beach FL
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    Original Message


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The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.