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If I formed an LLC with private investors and had short-term capital gains then,

  1. Are the capital gains taxed on the amount excluding the dividends/profits paid to investors?
  2. Will the investors have to pay short-term capital gains? or are they treated as regular dividend/interest?
  • Why does the order matter? Dividends paid are not deductible so the order does not affect your tax. – D Stanley Jun 20 at 2:23
  • Okay, rephrased the question, basically, will capital gains be taxed excluding the dividends/profits paid to investors? – blueskin Jun 23 at 23:43
  • For Federal tax, it makes a big difference whether the LLC elects to be taxed as a corporation or not, see irs.gov/businesses/small-businesses-self-employed/… (first unpaid google hit for: IRS LLC tax). For state tax it depends on the state, which you (also) didn't specify. – dave_thompson_085 Jun 24 at 7:20

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