I value the opinions of the contributors here, and I have been reading more and more on this issue of late.
I know there are professionals on both sides of this issue, specifically, whether an LLC member's distributive share of income is subject to SE tax.
I have read many things and while most point to an "all of it is" (certainly the IRS' position) approach, there have been a few small victories in court that point to the contrary.
I recently purchased my practice, and I would say that 90% of the small-business partnership owners were not being taxed for SE purposes. I believe that many of these have exposure. As you can imagine, as the "new guy" preparing taxes, increasing their tax liability substantially isn't the most favorable move to make as far as retention goes.
However, I believe that if I can educate them intelligently so that they have full understanding of the issues, the current environment, and the precarious precipice they are on, that they will be appreciative of that knowledge.
Another thing I'd like to discuss, let's say the regulators decide to go all in and clear, definitive rules, would the IRS go "scorched earth" on an SE crusade? Or would it be implemented in a fashion where the unwritten rule is that we'll let bygones be bygones, but don't let us catch you with your hand in the cookie jar again?
Thanks everyone!
A few good reads (OK, I decided to add more than a few):
https://www.taxlawforchb.com/2016/11/bi ... ng-doing/#
https://www.irs.gov/pub/irs-wd/201640014.pdf
https://www.lexology.com/library/detail ... 2047431f68
https://www.cbiz.com/insights-resources ... es-article
https://www.forbes.com/sites/anthonynit ... 74c2f164a5
https://www.forbes.com/sites/anthonynit ... c5237378a8
https://www.thompsoncoburn.com/docs/def ... e3f147ea_2
https://www.forbes.com/sites/procedural ... 449bee1f5f
A few conversation points:
- How have you handled these in the past?
- Have you changed your stance?
- How do you approach this conversation with client's?
- What is your standard of "active"?