Both a partner and a subcontractor?

Any work she does in the partnership as a partner would earn guaranteed payments on her k-1.  You would not issue a 1099-NEC to a partner in a partnership since they are getting a k-1 anyway

Thanks for your reply.

I do get your point about the K1. My wife currently is a sole prop and provides other services. While it may be out of the norm, can I nonetheless for some services pay her as a subcontractor for some of her activity creating an expense for the LLC. Yes, I understand then she would put those funds as income on her schedule C.

 

Your questions are all over the board as you are talking about Sch C, sole proprietorship and then a multi-member LLC.  This response is clarifying what @gloriah5200 noted since it appears your question is geared to when you become a multi-member LLC.

 

What @gloriah5200 is indicating is that "yes" you can do that, but you do not report those earnings on a 1099.

Once you become a multi-member LLC, you will report those earnings as what is called a "guaranteed payment".  These are earnings of a member that are paid to that member regardless of the profitability of the LLC.

These amounts are a separately stated item on the form 1065 and also specifically allocated to that member (your wife in this case).

Once you become a multi-member LLC and file a form 1065, you will no longer be filing the Schedule C.  The earnings from the K-1 will be reported on Schedule E.

 

 

Thank you. Sorry for the scattered appearance. The downside of not face to face.

This comment helps:

"These are earnings of a member that are paid to that member regardless of the profitability of the LLC."

My end goal is to keep year end income to me as low as possible because I am subject to income limitations whereas my wife is not.