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In anticipation of the upcoming Exempt Org and Texas Franchise deadlines (5/15), we've compiled a list of the most common questions here.
In anticipation of the upcoming Exempt Org and Texas Franchise deadlines (5/15), we've compiled a list of the most common questions here.
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- Analysis of Net Income - Managing Members of LLCs - A bug or?
Analysis of Net Income - Managing Members of LLCs - A bug or?
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TexCPA
Level 3
01-03-2023
11:21 AM
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I noticed that ProSeries puts LLC members marked as General Partners (because they are "Managing Members" of an LLC) on Line 2b of the Analysis of Net Income section as "Limited Partners". Their K-1s are correctly marked "General Partner". Form 1065 Instructions say that "members" should go on Line 2b, and yes, I agree completely with that, "members" of an LLC are treated as limited - however, "Managing Members" are not "Limited". The Instructions are silent on the specific treatment of Managing Members. It is my understanding that Managing Members are treated like General Partners, subject to Self-Employment Tax and the ability to deduct losses against ordinary income.
Anyone have a take on this? Is this an unfixed bug? Or am I missing something? Thanks in advance for your thoughts on this.
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TexCPA
Level 3
01-04-2023
02:10 PM
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Individuals, ordinary income/loss from page 1. If you have an entity other than Individual, and the General box is checked, it puts in on the General Partner line.
