Investors & landlords

So I have a number of comments based on your follow-up responses:

• As a member of an LLC that is taxed as a partnership (form 1065), you cannot be an employee.  As such, you should not be paid with W-2 wages.  This in itself is a problem and needs to get resolved.  Members of an LLC that is taxed as a partnership receive renumeration via what is called a guaranteed payment and this amount is reported as a separately stated item on the respective K-1.
• Just based on my first bullet, someone should get a tax professional involved to make sure you don't compound the payroll matter problem and get you started down the right path.
• If you are working for the LLC full-time, more than 500 hours as you stated, you are most likely classified as a material participant.
• Going into the next issues gets more complicated and once again a tax professional should be consulted.
• If you received LLC units without paying any $$, then I assume these were received for your services provided.  There needs to be written documentation on the issuance of these units.  While the facts are limited, and this forum is not conducive to going into detail, you most likely received what is known as a profits interest (versus a capital interest).  This distinction is important as one is taxable (capital interest) and the other is not.
• Since you indicated you did not invest any initial capital and most likely received a profits interest, you will not be able to use the loss currently.  The reason for this is that a member needs to know their outside basis and at-risk basis; these are not generally the same.  You are only able to take losses currently to the extent that you have at-risk basis, which it appears you do not have any at-risk basis; any unused losses will be carried forward indefinitely.
• As a follow-up to the first bullet, if you are a material participant in the LLC there is an issue of SE Tax on the income being passed through to you.  This is not a clear cut and dry issue in some cases and this is another area that you should get some tax advice.  This is a big issue as well.
• So as you can see, regardless of the size of an entity, in your case an LLC, issues can become complicated quickly and the need for a tax professional is evident.