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If the primary (and presumably only) business of the LLC is lending money, then why would the income from that activity not belong in sales and service receipts (i.e., Line 1a on form 1065)?

 

The net profit should be subject to self-employment tax for both members of the LLC.

 

It does not appear as if the income is either investment income or "other income" (the latter of which would be interest earned from extending credit in the course of your business, for example, allowing customers to pay for goods or services you provide over time, and not interest earned as the main source of income for your business).

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