Single member LLC holding and managing brokerage account. What type of income it is for LLC owner?
Wednesday, July 7th, 2010 at
12:30 pm
Is it capital gain, earned income, passive income?
Please advice.
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Tagged with: capital gain • disregarded entity brokerage account tax Id • holding brokerage accounts in an llc • Llc holding • Passive Income
Filed under: Passive Income
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This question is a little tricky. First, a single-member LLC is a disregarded entity in the eyes of the Internal Revenue Service. So it would be treated as a sole proprietorship. If the owner is managing his own or the LLC’s own money and not money for clients, then the income from the investments, whether it be dividends, interest or capital gains would be taxed as either passive income on Sch. B or Capital Gains on Sch. D of the owners 1040. If the LLC is providing a service to different clients and charging a commission or management fees to manage the investments of others, then this income would be taxed as self employment income on Sch. C.