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Deductions & credits
Yes, according to the Instructions for Arkansas Pass-Through Entity Tax, guaranteed payments are reported as taxable income on the member's AR individual tax return. The PTET paid on behalf of the members does not include tax on guaranteed payments.
However, if the LLC reports significant net income for the year, the payment of state taxes by the company may be beneficial to the members. You may wish to test both options to compare the outcome at the level of the members.
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March 13, 2023
8:04 AM