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Discussion Forum Index --> Advanced Tax Questions --> Guaranteed payments with loss
Discussion Forum Index --> Tax Questions --> Guaranteed payments with loss
PBinNJ (talk|edits) said:
| 22 April 2009
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| I've reviewed the previous discussion but I just want to make sure the rules haven't changed. Mother and daughter formed LLC taxed as a p/s. Mom invests about 100k in salon and daughter invests zero but both work and will draw guaranteed payments. Mom and husband have other profitable businesses so in order to get mom the losses in the first year or two, I'm suggesting they divide losses something like 98% mom and 2% daughter. Mom and daughter can still draw GP's and daughter will pay self employment taxes on excess of GP over her 2% share of the losses. Sound ok? Comments, please. Thanks.
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Bjeter (talk|edits) said:
| 23 April 2009
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| Yep, that's one of the advantages of being a partnership.
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Michaelstar (talk|edits) said:
| 26 April 2009
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| Unless these are the partnership percentage of loss sharing allocation ratios as stated in the partnership agreement, I think you might have an issue. Look at reg 1.704-1(b)(2)(iii)(a), (b) & (c)
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Garytax (talk|edits) said:
| 27 April 2009
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| Definitely amend the partnership agreement before the allocations are made. Also, whenever you make special allocations make sure you have substantial economic effect.
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