Real LLC Tax example

[Andrew Namkoong]

Hi everyone,

I am trying to understand this whole tax situation with a LLC and how we actually get taxed.

Say I have a property, under my personal name, that generates $1,000 per month on rents and $800 per month on all expenses combined. My annual cash flow would be $2,400 but I wouldn't pay a nickel in taxes due to depreciation and this will show up as a paper loss in my income tax.

Say if I held the exact same property under a LLC. To make the comparison easier, let's assume I have a 50% ownership in a multi-member LLC and the LLC has two of the properties noted above. So I would have $2,400 in actual cash flow (my portion) but the income statement will show a loss.

Question 1: I heard LLC owners pay taxes on their distribution. My portion of the distribution will be $2,400 but LLC had a loss in P&L. Do I pay taxes on this $2,400 or no?, If I do pay taxes, do I pay taxes based on the table below? or based on something else? (this is personal income tax table)

Taxable Income	Tax Rate
$0—$18,550	10%
$18,551—$75,300	$1,855 plus 15% of the amount over $18,550
$75,301—$151,900	$10,367.50 plus 25% of the amount over $75,300
$151,901—$231,450	$29,517.50 plus 28% of the amount over $151,900
$231,451—$413,350	$51,791.50 plus 33% of the amount over $231,450
$413,351—$466,950	$111,818.50 plus 35% of the amount over $413,350
$466,951 or more	$130,578.50 plus 39.6% of the amount over $466,950

Look forward to hearing from you and thanks in advance.