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.

[Natalie Kolodij]

A multi member LLC is a pass through- the income flows through and is taxed on your 1040 the same as if it was just in your name.

Assuming both partners are both active in the partnership there shouldn't be difference. The Partnership its self doesn't pay any taxes.