Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

I am part owner of a digital media LLC in Michigan. Our

Customer Question
Hello, I am part owner of...
Hello,
I am part owner of a digital media LLC in Michigan. Our income is driven primarily by music royalties. This will be our first year filing and I want to make sure we do it correctly and I'm not sure how to file.
I also wanted to confirm that we do not have to claim the $ as personal income as well. We were told by a CPA that we don't but I wanted to confirm that with someone.
Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 4 minutes by:
1/22/2016
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,985
Experience: Taxes, Immigration, Labor Relations
Verified

"part owner" - means you are a member of multi member LLC - correct?
So next issue woudl be HOW that LLC is classified for US federal tax purposes.
Under default rules a multi member LLC is classified as a partnership.

The LLC may elect to be treated as a corporation - either C-corporation or S-corporation.

So there are three possible options - and you need to confirm which is related to your situation because the tax treatment is different.

Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 2 years ago

see page 4
http://www.irs.gov/pub/irs-pdf/p541.pdf

A partner generally recognizes gain on a partnership distribution only to the extent any money (and marketable securities treated as money) included in the distribution exceeds the adjusted basis of the partner's interest in the partnership. Any gain recognized is generally treated as capital gain from the sale of the partnership interest on the date of the distribution.

.
I appreciate if you take a moment to rate the answer.
Experts are ONLY credited when answers are rated positively.
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.

Ask Your Own Tax Question
Customer reply replied 2 years ago
We plan on filing as a C-Corp not a partnership or S-Corp. It is my understanding that if we file as a C-Corp we are not required to claim any $ as personal income unless that money was distributed in the form of dividends.We are trying to avoid having to pay taxes under the business then also having to claim it personally as well. #1 we pay taxes twice on the same income and #2 it pushes some of our members into a different tax bracket.But the big question is, since the income is in the form of music royalties and no companies are reporting these to the IRS, then how are we supposed to file. Technically it could be considered sales. So there is a lot of confusion regarding how we should approach this.We were thinking just claiming 1 bulk lump sum on a 1099 and calling it day.
Tax Professional: Lev, Tax Advisor replied 2 years ago

You may not just file as C-corporation.
In order to do so - you need to make election with the IRS to treat the LLC as C-corporation.
C-corporation is a separate legal and taxing entity - it files its own corporate income tax return and pays corporate income tax.

Your personal tax liability - is a different matter - you are responsible for YOUR income.
Thus if you receive income form the C-corporation - that income is reported on YOUR individual tax return.
But if you personally receive NO income from C-corporation - you will not have any individual tax liability.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,985
32,985 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
I have to declare capital gains on the sale of personal
I have to declare capital gains on the sale of personal property in Canada where Canadian Taxes have already been filed for a US citizen. What measures can I use to minimize the tax liability? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,277 satisfied customers
To find out what are the new Capital Gains tax rates on real
Hello, Im Trying to find out what are the new Capital Gains tax rates on real estate property that is purchased and then eventually sold. … read more
Carter McBride
Carter McBride
LLM
1,152 satisfied customers
What determines tax liability for US citizens in Germany? If
What determines tax liability for US citizens in Germany? If I moved to Berlin in March 2017 under a Schengen visa and didn't finally get my work permit until June, do I have to pay taxes for the peri… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,392 satisfied customers
What is the rule on capital gain exception concerning
What is the rule on capital gain exception concerning selling your house. … read more
Lev
Lev
Tax Advisor
32,985 satisfied customers
What is my capital gains tax liability on commercial
what is my capital gains tax liability on commercial property inherited in 1991. assessed value at the time of inheritance was $171,000. Selling price would be $850,000; $200,000 at time of sale - bal… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,392 satisfied customers
If there is no federal tax liability in 2016 because there
If there is no federal tax liability in 2016 because there was no income in 2016, what is the minimum estimated tax that needs to be sent with the extension for 2017 to avoid a penalty?… read more
abci168
abci168
Principal
27 satisfied customers
I need to file a tax form. Its a new LLC with no income, no
I need to file a tax form. Its a new LLC with no income, no business was generated. Is someone avaiable to help me with this now?… read more
Shan-Nel Simmons
Shan-Nel Simmons
Tax Professional/Owner
Master\u0027s Degree
43 satisfied customers
If I'm filing an extension on my tax individual tax return
If I'm filing an extension on my tax individual tax return and don't know my tax liability, payments, balance due, or amount I'm paying for 2017 on the "Part II Individual Income Tax" section - what s… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,277 satisfied customers
Where do I report capital gains distributions in Turbo Tax?
Where do I report capital gains distributions in Turbo Tax? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,277 satisfied customers
K-1 with LT capital gains. Also 19A Distributions of the
K-1 with LT capital gains. Also 19A Distributions of the same. Why does it double up on the tax return? How can I keep it from doubling up. … read more
Lev
Lev
Tax Advisor
32,985 satisfied customers
How do I report income from sale of business interest which
How do I report income from sale of business interest which was classified as good will? I received a lump sum and will receive monthly payments for 5 years … read more
Lev
Lev
Tax Advisor
32,985 satisfied customers
Are royalties, interest and dividends reported in boxes 5,6a
are royalties, interest and dividends reported in boxes 5,6a and 7 of schedule K-1 required to be reported if held if stock is held in an IRA … read more
Lev
Lev
Tax Advisor
32,985 satisfied customers
I used a calculator to figure capital gains tax on the sale
I used a calculator to figure capital gains tax on the sale of my rental property in CA... do the figures look reliable? I am a hawaii resident. Will there be other taxes due besides capital gains? Th… read more
Carter McBride
Carter McBride
LLM
1,152 satisfied customers
Iowa Income Tax. Is 100% of capital gains on the sale of a
Iowa Income Tax. Is 100% of capital gains on the sale of a rental property deductible if the requirement is met for hours spent for management of the property? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,277 satisfied customers
How is the sale of a partnership reported on the personal
How is the sale of a partnership reported on the personal 1040 tax return? and how is "personal" goodwill recorded on the partnership since it is closing? … read more
Cole Parker
Cole Parker
Principal/CPA
Bachelor\u0027s Degree
111 satisfied customers
I have a LLC in the US. It is a partnership of two
Hi, I have a LLC in the US. It is a partnership of two non-resident aliens. A potential customer is asking us for a W9 which AFAIK we can't sign W9 as NRA. What can we provide as a partnership to the … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,277 satisfied customers
Where do report for Partnership (LLC) returns using Form
Where do report for Partnership (LLC) returns using Form 1065 income recipient from taxable federal grant? Specifically, 1099-G, Box 6.… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,047 satisfied customers
Is there a capital gain rate for corporations or the
HiIs there a capital gain rate for corporations or the corporation is taxed at the 21% rate as ordinary income ? In other words? if the crop earns only passive income then is it still the 21% tax brac… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,392 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x