If you have an LLC and take on a loan, can you repay that loan before the members of the LLC are taxed on the income or do you have to do it after?
So for example:
- LLC is split between 3 owners, 45/45/10
- LLC takes on a $200,000 loan (I assume the LLC does not pay income tax on that since you have a $200,000 liability as well)
- LLC generates $500,000 in revenue
LLC wants to pay off the loan, would it be
1. $500,000 revenue minus $200,000 liability (to pay off the loan) = $300,000 taxable income to be split 45/45/10
or
2. $500,000 taxable income split 45/45/10 then pay the $200,000 from the leftover money after individual taxes are paid on the $500,000?
Thanks!!
So for example:
- LLC is split between 3 owners, 45/45/10
- LLC takes on a $200,000 loan (I assume the LLC does not pay income tax on that since you have a $200,000 liability as well)
- LLC generates $500,000 in revenue
LLC wants to pay off the loan, would it be
1. $500,000 revenue minus $200,000 liability (to pay off the loan) = $300,000 taxable income to be split 45/45/10
or
2. $500,000 taxable income split 45/45/10 then pay the $200,000 from the leftover money after individual taxes are paid on the $500,000?
Thanks!!