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Tax Deduction Consulting: LLC Tax Deductions Washington DC

LLC tax deductions can be very confusing and the advice of a tax professional is strongly urged. The problems stem from the fact that an LLC can be treated several different ways for tax purposes. The idea behind a Limited Liability Corporation is to limit personal liability. When a business is organized as a sole proprietorship or partnership, the owners have a personal liability to the debts of the business.

Kevin C Clayton
(202) 637-5600
555 13TH ST NW OFFICE BLDG
WASHINGTON, DC
Specialties
Business, Life Science & Biotech, Corporate, Venture Capital, Contracts, Mergers & Acquisitions, LLC
Education
University of Virginia School of Law,University of Virginia
State Licensing
DC

Bryan Kendall Short
(202) 686-7600
#320, 1225 19th Street Nw
Washington, DC
Specialties
Corporate, Real Estate, Commercial, LLC, Venture Capital
Education
College of William and Mary, Marshall-Wythe School of Law,Boston College
State Licensing
DC, Virginia

Jeffrey G Davis
(202) 263-3390
1919 M ST NW STE 200
WASHINGTON, DC
Specialties
Tax, Partnership, LLC
Education
Georgetown University,Lipscomb University,Pepperdine University
State Licensing
DC

Steven M Buckman
(202) 351-6100
4315 50th Street NW, Suite 60
Washington, DC
Specialties
Debt Agreements, Contracts, Foreclosure, Real Estate, Business, Commercial, LLC
State Licensing
DC, New York

Pennie Elizabeth Pirsch
(703) 548-5182
1307 Duke Street
Alexandria, VA
Specialties
Business, Franchising, LLC, Partnership, Estate Planning, Elder Law, Guardianship, Wills, Power Of Attorney
Education
Creighton University School of Law,University of Nebraska
State Licensing
Virginia

Charles R Richard
(202) 246-3320
1629 K Street Nw, Suite 300
Washington, DC
Specialties
Estate Planning, LLC, Patent Application
Education
University of Houston Law Center,Tulane University,University of Louisiana
State Licensing
DC, New York

Craig A Max IV
(202) 454-6707
1666 K Street Nw, Suite 400
Washington, DC
Specialties
Estate Planning, Banking, Tax, Election Campaign, Corporate, LLC, Partnership
Education
Universite de Dijon Faculte de Droit et de Sciences Politiques,Vanderbilt University Law School,Vand
State Licensing
DC, Maryland

Patricia L Payne
1250 24TH ST NW STE 300
WASHINGTON, DC
Specialties
Litigation, Commercial, Business, LLC, Investment Fraud
Education
Georgetown University Law Center,Johns Hopkins University,University of Michigan
State Licensing
DC

Mark S Tenenbaum
(301) 961-5300
4504 Walsh Street, Suite 200
Chevy Chase, MD
Specialties
Real Estate, Debt Agreements, LLC, Commercial, Foreclosure
Education
Georgetown University Law Center,Brandeis University
State Licensing
DC, Maryland, Virginia

Mark S Rothman
(301) 951-9321
4800 HAMPDEN LN
BETHESDA, MD
Specialties
Estate Planning, Business, Tax, LLC, Partnership
Education
New York University School of Law,Syracuse University College of Law,Syracuse University
State Licensing
Maryland

Tax Deduction Consulting: LLC Tax Deductions

LLC Tax Deductions

LLC tax deductions can be very confusing and the advice of a tax professional is strongly urged. The problems stem from the fact that an LLC can be treated several different ways for tax purposes.

The idea behind a Limited Liability Corporation is to limit personal liability. When a business is organized as a sole proprietorship or partnership, the owners have a personal liability to the debts of the business. In an LLC structure, the liability is limited to the investment in and assets of the business. However, for tax purposes, a LLC creates some complex situations and to maximize the LLC tax deductions, it is necessary to have the company become an "S" Corporation.

When an LLC is a single member entity, it is treated like a sole proprietorship for tax purposes. This means that all income of the business is treated as earned income to the owner and is subject to FICA and Medicare taxes. The social security tax rate of 15.3% would apply on all earnings up to $90,000 and 2.9% would apply on all income over $90,000. When the LLC is a multiple member entity, it is treated as a partnership and again all income is considered as earned income.

In order to avoid this, an LLC must file a Form 2553 and apply for an EIN (employee identification number) and fill out a Form SS-4. This allows the LLC to be taxed as an "S" Corporation. This makes all income passive income and it is passed on to the owners as such. It is necessary that the LLC file an 1120S Corporate Tax Return. This election must be made within 75 days of the formation of the LLC or beginning of the tax year. Only United States citizens can make this election.

Another option is to file Form 8832 and apply for an EIN and structure the LLC as a "C" Corporation. In this case the income is passed on to the stock holders, and the LLC is able to take advantage of the low 15% on the first $50,000 tax rate. The Corporation then must file a regular Form 1120 Corporate Tax Form. This opti...

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