Discussion:LLC member salaries and Section 179
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Discussion Forum Index --> Basic Tax Questions --> LLC member salaries and Section 179
Discussion Forum Index --> Tax Questions --> LLC member salaries and Section 179
| 14 September 2009 | |
| LLC erroneously paid their members salaries (too late to correct it) and has net income for the year of $8000, after the salaries deduction. However, they purchased $50,000 in new equipment and want to apply Sec. 179 to the new equipment. According to Lacerte they cannot Sec. 179 the entire amount, as it is not adding back in the member salaries for the income test, like it does for S-corps. Trying to find a way around this, since these aren't guaranteed payments. Overrode the amount on the 4562 to add back the member salaries, but not sure that is the right thing to do. Has anyone had this happen to them before and what did you do to resolve it? Or are they out of luck with being able to take the full Section 179? | |
| 14 September 2009 | |
| gosh, could you tell us how the LLC is being taxed, as a 1065, I presume? | |
| 14 September 2009 | |
| well, you could amend the W-2s and 941s and state withholding and state unemployment returns, then treat the net amount distributed as guaranteed payments
OR you could tell the clients that this is the penalty for doing it themselves without contacting you during the year and therefore the 179 carries over to 2009, if elected | |
| 14 September 2009 | |
| so you don't see any way around it, where we could add back in the member salaries on the 4562 like it's done for S-corps? Obviously, Lacerte doesn't think it can be done, but it's just a software program, and I want to make sure we address all the angles. | |
| 14 September 2009 | |
| it can't be done if you don't treat the salaries as guaranteed payments (which would require amending all of those 941s etc) | |
RoyDaleOne (talk|edits) said: | 14 September 2009 |
| If the members are employees they can have W-2's. | |
| 14 September 2009 | |
| while true, that does not address the issue at hand: how do you use these amounts paid to allow ยง179 | |
| 15 September 2009 | |
| Is that true if the LLC files a 1065? I thought the members were partners and therefore couldn't be employees... | |
| 15 September 2009 | |
| I do remember seeing that somewhere else here awhile ago. What exactly are the conditions that would allow an LLC member to be classified as an employee and receive a W-2? | |
Harry Boscoe (talk|edits) said: | 15 September 2009 |
| "What exactly are the conditions that would allow an LLC member to be classified as an employee and receive a W-2?"
Working for the LLC in an employer-employee relationship. It's hard to give an example. | |
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