Special allocations of profit sharing in multi member LLC advice?

[Nikki Kofkin]

Hi everyone, I am in a three member LLC as stated above. I am hoping there is a tax expert out there who can help advise on what is allowed in terms of profit sharing, specifically if only one or two members of the LLC invest in a particular deal, how the profits can be allocated (like if everyone in the LLC must be paid profits or if just the specific investors in a particular deal can be paid profits on the deal they invested in?). I am definitely willing to pay for this consultation, I really need the help!

[Ashish Acharya]

Originally posted by @Nikki Kofkin:

Hi everyone, I am in a three member LLC as stated above. I am hoping there is a tax expert out there who can help advise on what is allowed in terms of profit sharing, specifically if only one or two members of the LLC invest in a particular deal, how the profits can be allocated (like if everyone in the LLC must be paid profits or if just the specific investors in a particular deal can be paid profits on the deal they invested in?). I am definitely willing to pay for this consultation, I really need the help!

You probably need to discuss with the tax preparer you going to work with later on.

Yes the profit can be allocated to specific individuals, and in the same matter, losses and, even just a depreciation, can be allocated to the specific partners.

Your accountant needs to do some math when they are preparing tax the tax return and your partnership agreement needs to be drafted in such a way that IRS will not challenge your allocation.

So it’s a team effort Between your accountant, your lawyer, and your partners when you want to do some kind of a special education. 

Specially allegations are complicated and I can almost guarantee you that this is not DYII project. Find a tax accountant/advisor you want to work with.