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IRS clarifies: Partners cannot be employees

(Journal of Accountancy) - The IRS issued temporary regulations intended to halt the practice some partnerships have adopted of treating partners as employees of a disregarded entity owned by the partnership so they can be included in employee benefit plans and receive other benefits. Interesting, your take?


L. Keith Jordan
Title: Sole Proprietor
Company: L. Keith Jordan, CPA
LinkedIn Profile
(Sole Proprietor, L. Keith Jordan, CPA) |

Personal opinion, this is yet another attempt by some to avoid abiding by the spirit, as well as the letter, of the law. Other than the exceptions being considered, you cannot be an employee of a disregarded entity you own -- no matter whether that is a sole-proprietorship, a partnership, or an LLC reported on Schedule C of your Form 1040. If you want to be an employee, structure and file as a C corp or an S-corp, or choose not to disregard the entity and file on Form 8832 for the LLC.


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