Difference between Manager and Managing Member LLC

[Ladynole97]

Could someone please give me their views ast to the difference between these two?
I have an influx of clients wanting to use LLCs and I have not found any good resources to use for Tax Research.

[Safire]

I don't think there would be a difference. LLC's consist of members and if one is the Manager, he would be the Managing Member. Are they asking what to call themselves?

[rosieea]

Everything I've read on the subject leads me to believe that a "managing member" is treated as a general partner, while a "member" would be considered a limited partner. Based on previous discussions on this board, there is a lot of disgreement on the subject of SE tax for LLC members, but it is my belief that managing members are subject to SE tax on their pass-through income, while members are not. Guaranteed payments, of course, are subject to SE tax regardless of the type member the recipient is.

With regard to the question about the difference between a manager and a managing member, I'd say they are one in the same. But the correct designation would be "managing member."

[Unregistered]

At least in some states it is possible to have a non-member manager assuming the operating agreement allows for it. If the manager is a member then his title is managing member.

[taxmandan]

LLC manager

Could someone please give me their views ast to the difference between these two?

One of the advantages an LLC has over a plain vanilla partnership is that the LLC can hire a manager who is not a member. This manager would be an employee with payroll, etc. Which means all of the members could be considered non-managers, but that does not mean they are exempt from SE tax. TheIRS hasn't made a determination about SE tax and LLC members since back in about '97 when the proposed rules were retracted due to political pressure. Some tax pros abide by that proposed rule for guidance and some don't. Choose you poison.

[JoshinNC]

where's Sova when we need him?

He and I have been battling this question on another board for a couple days now. He says nobody in an LLC is subject to SE, I say anyone who participates is (as they are managing day-to-day operations, and are a member-manager). He says GP is subject to SE and nothing else, no matter what the member does for the LLC. I'm sure he'll chime in on this one, but I say if they perform services their distributive gain/loss is subject to SE. If they want to avoid SE they should elect S-Corp status, take a pinance wage and pay income tax on distributive gains.

[Matt Sova]

My position

I have stated my position on this matter quite a few times on this board and the other one as well. As I stated on the other one your opinion is just that, you opinion. It is not based on the law as it is written, nor is it based on any binding IRS documents. Yes, the IRS came out with proposed regs, yes, they state that anyone who is active in the LLC is subject to SE Tax, and yes, I am certain that is how the IRS would like it. Problem is, TRA of 1997 shot this down and congress has given no guidance on the issue.

What do I think will happen? Congress will do nothing (don't they always!!) The IRS, in an audit, will subject members of an LLC to SE tax based on, well, nothing really. The taxpayer will appeal - quite possibly all the way to the Supreme Court. Then, we will finally have guidance on this murky issue. Until then, I will follow the law that we have in place, which is GP are subject to SE tax, while net income from a MMLLC is not.