LLC and 1099 or W2

[jbrichar]

What is the name of your state? CA

I am one of three managing partners with 33% interest in an LLC that manages, buys, sells and develops real estate. We are currently in the process of forming this entity. I will need regular compensation as well for managing the LLC. I am also in the process of aquiring my RE Brokers license. The goal is to retain commissions in house from the cooresponding real estate activiites.

Should I choose to take 1099 income from the LLC and set up myself as a Real Estate Professional for the tax benefits or must I be a W2 employee?

Thanks

 

[abezon]

If the LLC is taxed as a partnership, all income is passed through to you & is subject to SE tax. No 1099 is necessary. If the LLC files the form to elect to be taxed as an S-corp, the corp pays everyone fair wages & files W-2s. The wages are deducted on the corp's 1120S. Remaining profits are passed through & taxed as ordinary income.

You really should have an accountant to work with & talk to about these things.