tax as a shareholder of a LLC

Hi,

I had recently the opportunity to invest in a small LLC, which I did. I just want to know what kind of tax I will have to pay. I indeed know the system of "pass-through", which means all shareholders (not the company) are eligible to pay taxes on the company's profits according to the numbers of shares they have. But what if these profits are not distributed? Do I have to pay taxes on them anyway?

Thank you very much for your help

An LLC is able to be taxed as either a corporation if it elects to do so. (This is part of the new rules on "check the box" entity selection) Absent an election to be taxed as a corporation, the entity is taxed as a partnership.

Assuming it is taxed as a partnership, the taxable characteristics will be taxed to you irrespective of the cash you receive or dont receive from the LLC.

Some tax attributes are limited on a partnership level, others are limited on the individual level. Partnership tax law can be very complicated.

In general a partner is taxed on his or her prorata share of taxable income or loss realized by the business. However, the partnership agreement can specify different percentages for equity ownership, loss allocations and/or income allocations.

Losses can be limited though to your partnership basis, ie, you cannot write off more losses in total than the cash invested.

The above is a general discussion. Please ask a CPA who is knowledgeble both of Federal and state law to provide you with specific advice.