CPA vs IRS pub.- LLC and passive income?? - Posted by MCfla
Posted by MCfla on September 22, 2003 at 11:21:22:
Ok I read the archives, went to IRS.org and have spoken to an Accountant and to a CPA.
Q: If I am a member of an LLC that purchases and holds Rental property (only activity) do I have to pay Self employment/ SS taxes on the money flowing to me from the LLC? Does it make a difference if we elect to be treated as a Partnership or Corp?
CPA says No; all rental income is considered a passive activity.
IRS PUblication 3402 says Yes, “generally, members pay self-employment tax on their share of the partnership earnings”.
Accountant says Yes, LLC earnings are subject to self-employment tax.
Thanks in advance.