Chad Richardson wrote:

- quote -

With regard to question number 1: (first part) No but the
partnership may if it chooses. Usually a partnership makes
distributions to its partners in accordance with the
partnership agreement. Those distributions may be used to
pay estimated taxes by the partners.

However, if any member is a non-resident alien there are
federal withholding requirements if the partnership has
taxable income even if it (the LLC) does not make any
distributions. Also, many states require withholding to be
made at the partnership level with regard to cash
distributions made to non-resident (foreign or domestic)
partners. I know California has such a requirement but am
not sure about others. You should check with a tax advisor
in your state regarding state requirements.

(second part) The individual partners are responsible to
determine their respective estimated individual income taxes
based upon their personal income tax situation. See above
for my limited discussion of partnership distributions.

2 a. Yes it does matter. Each individual must meet one of
the underpayment exceptions each tax quarter (4/15, 6/15,
9/15, & 1/15 for a calendar year taxpayer). And, if the
adjusted gross income of the prior tax year is over $150,000
($75,000 married filing separately) then the prior year
exception is 110% of prior year tax.
2 b. Not that I have ever heard of. Generally, the
individual partner that underpays his or her individual
income taxes will simply be charged an underpayment penalty
that is owed with their individual income tax return. If a
subsequent examination (audit) increases allocable
partnership income to the partner then the underpayment
penalty calculation would be redone and a possible
additional penalty would be owed. If the original
calculation is incorrect for some reason the taxpayer is
ueually notified by the IRS with an adjustment - not an audit.

Scott W Stevenson, CPA in CA
stevensonscott[at]yahoo.com

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Our LLC (taxed as a partnership), has 3 equal members.

My question is related to calculating and paying estimated taxes.

1. Is it traditional for the LLC to withhold estimated taxes on the
partners' behalf and then cut them a check for the estimated tax
payment when due? Or rather pay the partners gross amounts and
let them be responsible for accruing?

2. With regards to the accuracy of the quarterly estimated taxes:

a) Does it matter how much of the estimated taxes are paid each
quarter as long as the 90% of current tax year or 100% or prior
tax year are met? (Within reason of course, i.e. I would expect
that paying 1$ each of the 3 first quarters then $20,000 in Q4
would be suspicious/too advantageous)

b) If you are audited, do you have to prove the validity of your
quartly est. tax calculation by showing that it was based on the
exact partnership net profit at the end of each quarter?

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