Compensation

[cdavis25]

Could a Limited Liability Partnership have w-2 and k-1 comp for the partners that counts as Plan compensation? I was thinking it they were taxed as a corp it would be w-2 and if they were not taxed as a corp it would be k-1.

[rcline46]

In my experience, in these situations, the K-1 is purely passive income to the limited partners (like a SUB S situation). The general partner(s) get K-1s that might have some 'earned income'.

[Bird]

My understanding is that an LLP that is taxed as a partnership is not supposed to be paying W-2 wages to the partners...but it happens fairly often; accountants want their withholding done through payroll. We will include both (adjusting the K-1 for 1/2 SE tax and contributions as necessary) as long as the K-1 income is subject to self-employment taxes.