Discussion:Is self employment income avoided with this structure...

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Discussion Forum Index --> Tax Questions --> Is self employment income avoided with this structure...

Bretsharon (talk|edits) said:

28 February 2006
Dear List,

Is self employment income avoided with this structure?

(A) Clients receive reasonable salary from a partnership, for which they work.

(B) Partnership's 99% limited partner is a corporation, either S corp or C corp.

(C) That Corporation then is wholly owned by clients. Corporation has no real business but to hold the investment in the partnership, and shareholders' receive nominal salary.

(D) the 1% General Partner is a grantor trust whose beneficiaries are the client

Isn't the SE taxable income eliminated on the profits left in the partnership?

Cataxpro@cox.net (talk|edits) said:

6 March 2008
Absolutely correct. Basically any 1099 I/C who doesn't do this is paying taxes unnecessarily.

Kevinh5 (talk|edits) said:

6 March 2008
you avoid SE tax, but pay Corp tax.

then pay tax again when $ is taken out of corp.

is that smart?

JR1 (talk|edits) said:

March 6, 2008
And think of the legal and accounting fees! When all you needed to do was bifurcate the LLC interest. Geez. I use that word intentionally so that you can search on it and find the link. There's an easy way out. Yours ain't it.
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