Many practitioners prefer the S-Gesellschaft as the unit of choice (compared to the limited liability company), as it can be seen as the best way to avoid net investment tax of 3.8%. This may be mainly due to the fact that it is convenient and common to use a landlord to compensate “W-2″ (in this case perhaps a “low” allowance) and that the distribution of remaining income (perhaps a significant amount) from an “active” source relative to the owner represents both payroll tax (including the additional Medicare tax of 0.9%) and avoid the net capital income tax of 3.8% on that income. This contrasts with situations where (i) it is not usual (and perhaps not permitted) to obtain “W-2″ income from companies that are partnerships for U.S. income tax purposes. B as a limited liability corporation, whose status is considered a standard tax, or (ii) an entity considered the sole holder of U.S. income tax. , as a limited liability company, whose status can be considered a standard tax classification. (a) In addition to books and records that must be kept in accordance with Section 3.151, a limited liability company retains its head office in the United States or makes it available to a person at U.S. headquarters no later than the fifth day after the individual submits a written request to review the company`s books and records, in accordance with the provisions of Section 3.152 (a) or 101,502.
: The applicable applicability of Texas franchised tax companies between liability companies, including limited liability and “active” limited partnerships, should no longer act as a deterrent to the choice of the limited liability corporation structure vis-à-vis the structure of the limited partnership company for “active” companies. 3. 3.8% net investment tax. The tax on net investment income of 3.8% came into force for fiscal years from 2013 (net capital gains tax of 3.8%). The following rules generally apply to individuals: (i) tax is levied on the net investment income of the person who exceeds the thresholds set (US$250,000 for married couples, $125,000 for unmarried tax payers); (ii) almost all non-compensation income (other than wages, bonuses and income from self-employment) is considered net income from capital; (iii) an exception is the improper income of a trade or business that is not “passive” to the individual (i.e. “active”) in accordance with the rules on passive business loss (CRI 469 and associated cash rules); and (iv) the physical participation audits covered by Regulation (EC) No. 1207/2009. 1.469-5T (a) are generally used to determine whether a person is materially involved in the business or business and, therefore, that person is “active” in that trade or activity (the income attributable is not subject to net investment tax of 3.8%). Here too, as discussed above with respect to passive activity rules, it would appear that a limited liability company applies all seven audits, but the limited partnership applies only three.
However, for both limited partnerships and limited liability companies, there may be an exposure to the fact that qualification for a physical participation test may result in the share of income attributable as income from an independent activity.