Wednesday, November 9, 2011

Single member LLC holding and managing brokerage account. What type of income it is for LLC owner?

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 pive 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.

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