I'm a member of a pass-through LLC in the state of Oregon, paid monthly via guaranteed payments. I was also paid a yearly distribution. The complicating factor is this: my membership shares having a vesting period that is not yet up, so the shares are temporary. I could be fired tomorrow and have no ownership. I have been paying my estimated quarterly taxes, so I won't be getting any unpleasant surprises from that.

As a temporary member, is my distribution taxed as a guaranteed payment?

As a temporary member, do I even have guaranteed payments, or should my payments be treated as ordinary salary until I become vested and permanent?

  • You will really want to consult a tax professional on this. The determination can hinge on all kinds of complicated details such as the method by which the amounts of the guaranteed payments were computed, the fair value of any labor you did for the LLC, and so on. – David Schwartz Mar 26 at 19:32

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