In a 2 member LLC being issued 1099-MISC using or EIN and We will both be salaried employees of the LLC, how do we file our taxes

[Carl]

Understand that the below is assuming you have ***NOT*** file IRS Form 2553 to have your multi-member LLC "treated like a S-Corp" for tax purposes, nor have your filed IRS Form 8832 to have your multi-member LLC "treated like a C-Corp" for tax purposes. If you have filed either of these forms, then STOP READING NOW.

Our 2 member LLC ......

.....is a disregarded entity as far as the IRS is concerned.

Can we issue ourselves 1099s and pay LLC taxes on what was not distributed?

Re-read my previous comment. Under no circumstances and with no exceptions will you or the partner issue yourselves a 1099-MISC or a W-2. There are no exceptions. Since this disregarded entity is a multi-member LLC, the LLC will issue each partner a K-1 (IRS Form 1065 K-1) which each partner will *require* in order to complete their personal 1040 tax returns.

We aren't salary employees,

The owner's of a multi-member LLC can't be employees, salaried or otherwise, of that same multi-member LLC even if they want to. That doesn't mean you can't have employees. It means that "you personally" can't be an employee of this multi-member LLC.

and we're not administraive executives (like a CFO)

Of course not. A disregarded entity (which in the eyes of the IRS does not exist as a separately taxable entity) can't have an CFO or any other kind of officer. At best, you have a "managing member" and that's it.  But even then it does not change the fact that a multi-member LLC is not a separately taxable entity.

We are located in California.

While there are some things that are state specific, this isn't one of those things and it doesn't matter what state you are in.

[NicholeS]

Thank you!  Are all LLCs disregarded entities, regardless of the number of members?  Would your andwer be the same if we were a C corp?

[Carl]

Yes. Any LLC be it single member or multi-member is a disregarded entity. You sometimes hear them referred to as "pass-through" entities. That's because "ALL" money, both directions (income and expense) merely "passes through" the entity to/from the owner(s). It ends up on the personal tax return one way or another.

For a single member LLC, it "passes through" the LLC on SCH C as a physical part of your personal 1040 tax return.

For a multi-member LLC is "passes through" the LLC on the K-1 that gets issued to each owner by the LLC. (For tax purposes, the only difference between a multi-member LLC and a Partnership is the spelling. Literally!)

Remember, rental income is passive. Therefore it's not subject to the additional 15.3% self-employment tax, nor does it count for social security, medicare, or for figuring your maximum allowed contribution to a tax deferred retirement plan or ROTH of any type.

So for a single member LLC, a SCH C is filed with the business owner's personal 1040 tax return. However, *NOTHING* concerning residential rental real estate will be reported on that SCH C. Not one single penny of income and not one single penny of expense. It all gets reported on SCH E as a part of the owner's personal 1040 tax return.

For a multi-member LLC that will be filing IRS Form 1065-Partnership Return, the rental income is reported on IRS Form 8825 with the form 1065.  The end result, be it gain or loss (commonly a loss) is on line 21 of the 8825 and that gets transferred to the 1065 K-1 line 2. When that K-1 is entered into the owner's personal 1040 tax return the amount on the K-1 line 2 gets transferred to page 2 of the SCH E in Part 2.

So any way you do this, the rental income/expenses (or the results from same on the 8825) end up where they belong on the SCH E of your personal 1040 tax return.

Would your andwer be the same if we were a C corp?

I know as much about C-Corps as you do about quantum physics. But it's the other "non tax related" stuff you need to understand. It's that non-tax related stuff that can take a chunk out of your rear end permanently. THat's not just with an incorporated business either (be it C-Corp or S-Corp) but also with unincorporated business such as a partnership or single/multi-member LLC.

On the different business types, the laws differ from state to state. So that's why this *PUBLIC* user-to-user forum is *NOT* the place to be getting advice that *WILL* have a legal impact on your at some time in the future, be it a positive or negative impact.  Just understand that while a CPA or other tax professional may be well versed on the tax side, I would not expect them to be well versed (if versed at all) on the other stuff.

Now this is my personal opinion, but I think that the best type of professional to deal with seeking information that is what I call "well rounded" on all legal fronts, is an attorney that specializes in wills, estates, and probate. But that's just my opinion based on the fact that it's the exact type of legal professional that I utilize when it comes to my 3 rental properties. One thing that impressed me about my lawyer was the fact that he referred me to a tax attorney for "more detailed facts" on the tax front, as he admitted he didn't have the knowledge to go as deep into it as I was going with my specific questions at the time.  But everything else concerning things like insurance, mortgage liens and landlord/tenant rights, he was well versed, highly knowledgeable and very experienced in those areas.

[NicholeS]

Factastic input, thank you.  I'll save your responses and will probably refer to them annually.  Thanks also for the attorney recommendation, that's a great next step.