LLC Taxation

The video explains that an LLC is typically a disregarded entity, meaning its profits and losses pass directly to its owner members, who report them on their personal income tax statements. The LLC itself does not pay income taxes but may need to file informational returns. In a member-managed LLC, members pay self-employment tax on their share of profits. In a manager-managed LLC, passive income received by members is not subject to self-employment tax. The video distinguishes between these two structures and their tax implications.

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