Answered

Welcome to Westonci.ca, your one-stop destination for finding answers to all your questions. Join our expert community now! Get accurate and detailed answers to your questions from a dedicated community of experts on our Q&A platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.

Sam and Dave form an LLC that is taxed just like a partnership or pass through entity. Sam and Dave each own 50% of the
LLC. At the end of the year, the LLC has net income of $100,000. Sam and Dave decide to pay one half of the net income to
themselves as an agreed distribution. The remaining amounts stay in the LLC bank account. As a result
The LLC will pay income and social security tax on $100,000 and Sam and Dave will have to pay a dividend tax of 20% on their
distributions.
The LLC will pay tax on the $100,000 to the IRS as an entity level tax.
Sam will have to pay income and social security tax on $25,000
Dave will have to pay income and social security tax on $50,000

Sagot :

Parrain

Based on the fact that Sam and Dave decided to pay themselves half of the net income, Dave will have to pay income and social security tax on $50,000.

What will happen to Sam and Dave?

When an LLC is formed, it is taxed on a pass-through basis which means that its income is treated as income of its partners as sole proprietors.

This means that the $100,000 net income will be treated as income for the Sam and Dave. Both of them will therefore pay income and social security taxes on $50,000 each which will be their share.

Find out more on LLC tax regimes at https://brainly.com/question/25020828.

#SPJ1

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.