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I have been told by a Tax specialty group the following: I

Customer Question
I have been told by...
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: 2 years ago.Category: Tax
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Answered in 7 minutes by:
10/28/2015
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3,865
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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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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