[quote=no_such_reality]You may be right, if it’s an offical promissory note, then it’s interest and not wages. I was thinking taxed as wage income. Hence, current tax advantage for dividends instead of income.
If you have an LLC, you can distribute profit as dividends and not wages.
Also, was in an investment business, the expenses related to traveling to said location for checking on the investment/business, are business expenses, reducing the net profit that is then subject to tax. He could also use the LLC to cover other valid expenses related to the investment business and thus have a smaller tax exposure.
AS for retaining the earnings, if he doesn’t need them, then up to certain thresholds, the LLC could retain the earnings, not paying tax now on them, and allow the LLC to use the earnings for business purposes.
But has I intended with the don’t quote me, the specifics are very pertinent and I may be misinterpreting.[/quote]
No. Distributions from LLC’s are not taxable. LLC income is taxable (whether or not distributed), in exactly the same way as if the income is recieved directly by the taxpayer. Interest remains interest. Travel expense deductions related to debt obligations would be difficult to defend, whether incurred by an LLC or an individual taxpayer.
