Wholly Owned LLC

[tacks]

There's no "reasonable salary" requirement for the wholly owned LLCs. Or is there?


(by "reasonable salary" i'm referring to the rule which S corp shareholders are subject to)

[Burke]

Well, is it treated as a "disregarded entity?" As such, it would be ignored and a Sche C prepared subj to SE tax. No salary. Or did he ask that it be taxed as an S-Corp?

[JohnH]

I take it from the nature of your question that the LLC has elected for the business to be treated as an "S-Corp". If so, then the business will be expected to conform to all rules which apply to S-Corps, including reasonable salary issues. The IRS is looking at the S-Corp itself, irrespective of whether the underlying ownership is via being an LLC member or a shareholder.

[kpangelinan]

more info

There's no "reasonable salary" requirement for the wholly owned LLCs. Or is there?


(by "reasonable salary" i'm referring to the rule which S corp shareholders are subject to)

I take it from the nature of your question that the LLC has elected for the business to be treated as an "S-Corp". If so, then the business will be expected to conform to all rules which apply to S-Corps, including reasonable salary issues. The IRS is looking at the S-Corp itself, irrespective of whether the underlying ownership is via being an LLC member or a shareholder.

Yup....need more info. If no election, no, if election for S-corp treatment, yes.

[tacks]

Big thanks

Thanks to everyone for responding. I was at an associate's place of business doing tax planning for him and his associates. In other words there's fair amount of $$$$$ contingent on what i'm able to do. And therefor what i know.

Getting fast answers was crucial -- more helpful than i can describe.