The Pocket Small Business Owner's Guide to Taxes by Brian Germer

Author:Brian Germer [Brian Germer]
Language: eng
Format: epub
Publisher: Allworth

Proposed IRS Regulation

In January 1997, the IRS issued proposed regulations that specifically addressed the LLC self-employment tax issue and set out rules for determining when LLC members are subject to self-employment tax (Prop. Reg. §1.1402(a)-2(h)(2)). While the regulations may have had a good conceptual framework, they created a political firestorm as many politicians, including Newt Gingrich, saw it as a “stealth tax” since it was the result of an IRS regulation and not an Act of Congress. Congress ended up intervening and prohibited the IRS from making the proposed regulations final until July 1, 1998. The IRS ended up backing down on the issue, and since that time, the issue has not been revisited by Congress or the IRS. Whether it was the Lewinsky scandal that distracted Congress or the US Embassy bombings, July 1998 came and went, and fourteen years later we still have no finalized regulations on the matter.

The point of this short history lesson was not to encourage you to reminisce, but to give you some background on the predicament that LLC members face in trying to find guidance on how to deal with self-employment tax. Without any final regulations or an Act of Congress, we are left with looking at the concepts behind the proposed regulations and then making our best attempt at forming reasonable strategies for determining self-employment income.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.