Thanks for the reply.
We are in a house flipping business, so we split the profits 50/50 after closing each sale.
We did not withhold anything all year knowing we would owe those taxes on the return.
I read about the 60/40 rule, so on Turbotax I put in 60% for salary, and 40% distributions on everything, and I zeroed everything out after deductions to make a net profit of 0.
So you're saying in addition to the K1, I need to issue each owner a W-2 form? Because my tax consultant said not to do that.
When I was generating the W-2 it said since I put 0 for social security and medicare taxes that it would be a red flag. But if I issued it as a1099-Misc instead, I wouldn't be required to withhold anything.
So do I have to issue each owner a W2?
