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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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I have been told by a Tax specialty group the following: I

Customer Question

I have been told by a Tax specialty group the following:
I own a business which pays me comfortably with W2 form.
They say I should start an LLC management company. Then this company
bills the main company for my services. The income form the llc management
company can be filed as a capitol gain--Is that correct
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.

No, what you have written does not sound correct. While you can start an LLC Management Company, the income from the LLC cannot be claimed as capital gains income. SEE BELOW:

DEFINITION of 'Capital Gain'

1. An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be claimed on income taxes. A capital loss is incurred when there is a decrease in the capital asset value compared to an asset's purchase price.

2. Profit that results when the price of a security held by a mutual fund rises above its purchase price and the security is sold (realized gain). If the security continues to be held, the gain is unrealized. A capital loss would occur when the opposite takes place.

REFERENCE SOURCE:

http://www.investopedia.com/terms/c/capitalgain.asp

Additional information that you might find beneficial:

http://apiexchange.com/index_main.php?id=8&idz=238

Let me know if you require further assistance with this matter.

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