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I have formed an LLC and have sold member interests for

Hello. I have formed an LLC...
Hello.
I have formed an LLC and have sold member interests for $1,000 and then $4,000.
I have also, on occasion,l issued shares for services.
My question is this: if I issue shares for services, should I set the capital account for those shares at the current offering price? Also, the shares I issue do not come with voting right.
In addition, should I report those issuances as a payment or a credit for the receiver and report that as income to them in the year of issuance?
Thanks.
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1/21/2018
WiseOwl58
WiseOwl58, Attorney
Category: Business Law
Satisfied Customers: 4,595
Experience: Senior Associate at White & Case LLP
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Yes, when you issue shares for services, the capital account should be at the current offering price, which should be the fair market value.

For the receiver, the value of the shares is taxed as ordinary income, just as if it were a paycheck for that amount. Therefore, you should report it as income to the receiver, via Form 1099, for the year that the mmbership interests are issued.

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WiseOwl58
WiseOwl58, Attorney
Category: Business Law
Satisfied Customers: 4,595
Experience: Senior Associate at White & Case LLP
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