LLCs and S Corporations: Mitigating Self-Employment Tax for Flow-Through Entities

An encore presentation with live Q&A.

A 110-minute CPE webinar with interactive Q&A


Thursday, October 28, 2021

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, October 1, 2021

or call 1-800-926-7926

This course will assist tax professionals in determining whether flow-through income should be subject to self-employment tax. Our panel of pass-through entity veterans will explain how reasonable compensation, payments to partners, and management authority status affect self-employment tax on distributive share income of owners of pass-through entities. They will examine recent cases and the IRS's position on when pass-through income is subject to self-employment tax, and will consider how possible future legislative changes may affect current law and planning.

Description

For LLCs and partnerships, tax advisers struggle with whether distributive share income is subject to self-employment tax. As a result of this uncertainty, tax advisers often reflexively recommend electing S corporation status solely to mitigate self-employment tax. Before making such an election, tax advisers and their clients need to carefully weigh the potential disadvantages of S corporation status against a realistic estimate of the potential self-employment tax savings, and against alternative structures and reporting positions that would allow the LLC members or partners to avoid self-employment tax on their distributive share income.

Listen as our panel of self-employment tax experts explain, based on current law and recent cases, what income from flow-through entities can be reported as exempt from self-employment income and the implications for structuring and classifying business entities. The panel will also highlight possible legislative changes on the horizon.

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Outline

  1. Overview of self-employment tax on pass-through income
  2. S corporations
    1. Self-employment tax considerations
    2. Reasonable compensation
    3. Weighing S corporation status
  3. LLCs and partnerships
    1. The limited partner exception: law and recent cases
    2. Planning implication
  4. Possible legislative changes

Benefits

The panel will cover these and other critical issues:

  • When should an LLC member's flow-through income be reported as self-employment income?
  • How can payments to partners be structured to mitigate self-employment tax?
  • When do the disadvantages of S corporation status outweigh the potential self-employment tax savings?
  • How might future legislative changes affect planning for self-employment taxes for LLCs and S corporations?

An encore presentation with live Q&A.

Faculty

Browne, James
James R. Browne

Partner
Barnes & Thornburg

Mr. Browne advises clients on the U.S. income tax aspects of domestic and international business transactions and...  |  Read More

Pon, Lawrence
Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP

-
Pon & Associates

Mr. Pon has been in practice since 1986 providing comprehensive tax and financial planning, tax preparation and...  |  Read More

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Early Discount (through 10/01/21)

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