Schedule K-1 question

[Belgarath]

So, I'm not a CPA, and I wondered if this statement from a client's CPA makes sense, where there are two or more Schedule k-1's, but not a CG/ASG, and there are no participating employers? To me it seems odd, but perhaps it is perfectly normal:

 

The K-1 from that (other LLC) will have a substantial effect on his K-1 from (XXXX), but it won't change his earned income from (XXXX). His 2023 self-employment income from (XXXX) is expected to be ($$$$$) prior to employer contributions and reduction for self-employment taxes.

[C. B. Zeller]

Is XXXX the member of Other LLC - as opposed to the individual himself? If so then it might make sense as the income from Other LLC would flow through to XXXX (and affect the K-1) but would not be earned income with regard to XXXX.

[Belgarath]

Let me see if I can give you accurate information pertinent to the question. XXXX is the business sponsoring the XXXX plan. Joe Schlobotnik is a 70% owner of XXXX, which is an LLC taxed as a partnership. Joe has ownership in some other LLC's taxed as partnerships, but not considered a CG nor an ASG. None of the other LLC's are signed on as participating employers.

???

[C. B. Zeller]

What I am wondering is, if you look at the K-1 for "Other, LLC," who does it list as the member? Is it Joe, or is it XXXX?

It's certainly possible for one LLC to be a member in another LLC. That would also explain why the income from one would affect the other. Ultimately it's all going to flow through to Joe's 1040.

[Belgarath]

Ok, thanks!

[CuseFan]

20 minutes ago, Belgarath said:

Joe Schlobotnik

Damn, I opened a hundred packs of bubble gum and not one Joe Schlobotnik!

[Belgarath]

I figured some people might get that reference.

[CuseFan]

Refreshing to see these occasional pop-culture (or should I say pops culture?) references which are lost/useless when chatting with our newer employees. Thanks