How should I pay partners in an LLc that does not have any net income

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Submitted by Anonymous on Sun, 2010-01-24 17:45.

Hi Linda,

We have an LLC partnership. It does not have any net income yet. It is still a loss for the year. We have paid ourselves and I need to know if I should do a 1099 for each of the partners as a contract labor expense or should I do an owner draw even though there was no income and no retained earnings to take the draws out of.

Heather

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IRS Circular 230 Disclaimer: Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice in this communication, including any attachments or enclosures, was not intended or written to be used, and it cannot be used, by any person or entity for the purpose of avoiding penalties imposed under the Internal Revenue Code.

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How should I pay partners in an LLc that does not have any net income

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