Gary Goodman wrote:
- quote -

Take a look at the entity classification regulations
(commonly called the "check the box" regulations), reg
sections 301.7701-1, 301.7701-2, and 301.7701-3. Under the
regulations, any unincorporated association that has two or
more members is classified as a partnership by default
unless an election is made to treat the association as a
corporation.

It might also be helpful to show him Form 8832 and the
instructions to that form.

--Chris

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"Gary Goodman" <garyXg7X[at]yahoo.com> wrote:

- quote -

The IRC doesn't recognize LLC's, so they have to be treated
as something that is recognized. There's probably a letter
ruling for your state allowing the creation of LLC's -
perhaps it talks about this point.

Stu

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"Katie" <katiej_1958[at]yahoo.com> wrote:
- quote -

Katie, that's what I thought, but the client wants us to
prove it. I think part of the problem is that he doesn't
understand the rules of an LLC.

Thanks,
Gary

--
The above address is fake. If you want to contact me
directly, please send an e-mail to: gary at gdgoodman dot com.

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Gary Goodman wrote:

- quote -

He's an employee if the LLC elects to be taxed as a
corporation. Otherwise, he's a partner for tax purposes and
gets a guaranteed payment.

Katie in San Diego

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I'm probably missing some information, or my brain is fried.

Client is retired, but has been offered a position with an
LLC. He will own 5% of it and receive income. To negotiate
the right amount, he wants to know if he will be a W-2
employee and pay only his half of FICA, or must he receive
guaranteed payments and have to pay both halves?

Gary

--
The above address is fake. If you want to contact me
directly, please send an e-mail to: gary at gdgoodman dot com.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >