I'm glad I asked the question.
Concerned now that loans guaranteed by members (not partners) affect basis. If they are personally liable, don't know why not...
-
I just checked a 2-member LLC (filing as Form 1065) return that I prepare, and my software correctly shows all the gain/loss as assigned to "Limited partners" on Schedule K "Analysis of Net Income (Loss)" section. However,I have been marking the Schedule K-1 Part II Box G for both as "General Partner or LLC member-manager". The instructions do not define what a "LLC member-manager" is, so I don't know if I'm doing it right or not.Leave a comment:
-
"Wonder where this kind of thinking came from...."
From the definition of general and limited partners. It has nothing to do with being "fully engaged and working within the partnership".
A general partner is a partner who is personally liable for partnership debts.
A limited partner is a partner whose personal liability is limited to their contributions (or assessable contributions) to the
partnership.
Unlike a partnership, none of the members of an LLC are personally liable for its debts. Therefore, LLC members are classified as limited partners if the LLC is treated as a partnership.
As an historical note, this is from some material I have from 2010, I wonder if anything has changed.
"Prior to July 1, 1998, the IRS was precluded from issuing regulations defining a limited partner, which could be used to determine whether a limited liability member should be treated like a limited partner or a general partner. Even though more than a decade has passed since this date, no such regulations have been forthcoming."
Leave a comment:
-
Does this make sense?
For an LLC electing to file as a partnership:
According to Drake, any LLC members are classified as "Limited Partners" instead of General Partners, even if the owners are fully engaged and working within the partnership. Does this make sense? Wonder where this kind of thinking came from....
Certainly not my idea,,,,
Leave a comment: