FACTS:
LLC in CA, 3 members. One member is a foreign alien who brings in most $. The business has losses.
No formal partnership agreement in place yet.
QUESTION:
To confirm my understanding, interest in partnership is determined by ratio of contributed capital. Please correct if it's not correct.
The idea is to apply 9.8% interest (capital) to the foreign alien partner and the rest of his money to account as a loan to LLC. They understand they need to issue 1042S and report/pay interest.
Is it a viable option?
Your input is much appreciated.