Business Entity Selection and the Tax Consequences of Converting

For this post Brandon Rains, founder of the Rains Laws Firm and an expert on business formation espouses his observations about business structure changes and I address the income tax reporting requirements of those changes therein. Generally speaking there are five choices when it comes to business structure and income reporting requirements: Sole Proprietorship (IRS Form…

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LLC Income is INDEED Subject to Self Employment Tax: IRS Chief Counsel Advice 201436049

In 1997, the IRS issued proposed regulations governing when the distributive share of partnership income for Limited Liability Company (LLC) members was to be included in self-employment income. It basically advised that an LLC member would be treated as a limited partner — and thus the distributive share would NOT be self-employment income– unless the…

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What is the best Business Structure to form If Any?

What I love most about Colorado, more than the 300+ days of sun every year and the glorious rocky mountains, are the people.  For the most Coloradans are risk taking job creators, starting new businesses from scratch out of their garages and turning passions for a hobby into a business with a profit motive. Of…

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Single member LLC

Over the years, there has been confusion regarding Single Member Limited Liability Companies (SMLLCs) in general and specifically, how they can report and pay employment taxes. An LLC is a new entity created by state statute. The IRS did not create a new tax classification for the LLC when it was created by the states;…

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