Partners are not employees and should not be issued a Form W-2 in lieu of Form 1065, Schedule K-1, for distributions or guaranteed payments from the partnership.
this particular statement from IRS does not preclude from some one having W2 in addition to Form1065 from the company.
I manage a medical group. I have two roles in the company. One is seeing patients like every other physician employee. Second is managing operations of the medical group.
I have been receiving W2 income similar to everyone in the company based on number of patients seen or number of shifts worked.
Then the profit is issued as 1065 . and this is in addition to W2. Both of these incomes are computed in 1040 as a pass through entity to compute AGI.
I am not an accountant and my accountant suggested this is correct way to do it. Recently someone mentioned about restriction for LLC owners not being eligible to have W2 income. I am curious about the interpretation.
