taxes w/llc

R

razf1

Hey guys,

Was wondering any of you that are incorporated as LLCs...do you pay yourself the capital gains quarterly and then file at same time or pay lump sum end of year.

I am wondering if there are any issues as this is not normal wages so unsure if IRS would penalize me for not giving them their cut at quarter end. Obviously I would prefer to pay them Dec. 31st to maximize trade capital.

Thanks,
Raza
 
looks like you are trying to find a way around estimated taxes? probably the only way is distribute at end of the year and pay taxes after. receive quarterly and not paying estimated taxes probably not going to work
 
Quote from razf1:


Was wondering any of you that are incorporated as LLCs...do you pay yourself the capital gains quarterly and then file at same time or pay lump sum end of year.
More...

From what was explained to me, LLC is a "pass through" entity. The tax liability is passed through to the owners.

If your LLC has realized gains, taxes need to be paid. If you pay yourself, I think it's called "distribution". You can take distribution any time (as well as make contribution any time). But you as an owner of your LLC are liable for estimated tax due each quarter whether you take distribution or not. You can take a distribution to pay the estimated tax, or you can pay your estimated tax via your other income sources or savings. I believe either way you need to file the estimate tax and make the payment each quarter. IRS penalizes you for not making estimated tax payments each quarter, something like 1-2% per month owed.

The above is my belief to be correct - but check with your accountants.
 
Yeah I guess I am wondering about estimated taxes on capital gains versus wages...since capital gains is not consistent income stream my expectation would be that while you are liable for the tax on it, you do not have to pay it per quarter as you do for normal wages.
 
Quote from razf1:

Yeah I guess I am wondering about estimated taxes on capital gains versus wages...since capital gains is not consistent income stream my expectation would be that while you are liable for the tax on it, you do not have to pay it per quarter as you do for normal wages.
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it's really simple-you made money this quarter-you pay estimated taxes. you didn't-you not paying.here is more info about it-

http://www.irs.gov/businesses/small/article/0,,id=110413,00.html

also remember-that short term cap gains are treated just like wages(ordinary income). -

http://taxes.about.com/od/capitalgains/a/CapitalGainsTax_4.htm

all you have to do is to pay estimated taxes DURING the year on 90% of your declared income.penalties are not a big deal,if you can beat the interest. more about it on IRS site
 
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