? for Don Bright on K-1s

Discussion in 'Professional Trading' started by Speedracer, Dec 27, 2001.

  1. Don,
    I am a member of an LLC and they give me a 1099 at the end of the year. I then have to pay self-employment. I am interested in how your firm gives out k-1 vs. 1099s. What do I have to get my LLC to do in order for them to give me a K-1 vs the 1099? What do they have to do differently? Thank you
  2. ddefina


    In general...A person who receives a K-1 is an "owner" or Member in the LLC, and a 1099 means you're considered an independant contractor. It's up to the other owners how they handle this. If you are a Legal Member then you should get a K-1 showing your capital contribution, and distribution info. It's possible you didn't contribute capital and they just give you a 1099?
  3. Does everyone at bright contribute capital? They are considered partners in the LLC? I thought that you would have to participate in the the LLC's profits to be a partner and get a K-1. How does this work at bright? I would like to get the LLC I trade under to do this, since we contribute capital to the LLC. ANy comments would be appreciated.
  4. why doesn't Don answer this question?
  5. I am replying to this to get it to the top of the thread in hopes Don will reply.
  6. If you received a 1099 instead of a K-1 you must be getting involved in a "sticky" area of "guarnteed payments" or something. This is kind of silly since it red flags the IRS and costs you money. A couple of firms do this, but it applies more to "employee" types, not true LLC partners.

    I am pretty sure that I know which firm you're with, and therefore cannot suggest anything that would help without looking as if I were trying to solicit your departure from there. If you're profitable (net) you should be on the K-1 only program.

    This is an example of getting involved in an employment contract...which really isn't the type of contract you want to be in. They treat you as an "employee trader" but don't want to pay their share of FICA, and put the whole thing on you. They can "write-off" your "salary" (draws) and you have to pay all taxes including FICA and Medicare. They will tell you about the benefits of being able to make donations to your IRA or something, but again, that doesn't cut it. Since most accountants want more business, many won't be much help either.

    Sorry I can't be of more help.
  7. I don't really want to educate our "competitors" out there ...but....I can at least say this: We have Class A members (owners, who put up the $10Mil (minimum) capital), and we have Class B members (traders), who put up their own money into a trading sub account. This way the class B members keep all their profits, and have all the other benefits (tax and otherwise).

    We aren't "getting away with anything" - we comply with all the rules (and have the legal bills to prove it)...We simply do our best for our traders, as trite as that may sound.
  8. Sorry to be tardy in my reply, I guess I missed one. See above...
  9. Your second post answered my questions (class A vs. class B). I appreciate you being forward with the competition. We scalp straight Nasdaq though so we are not huge competition for you. Again, Thank you.
  10. We do have room for "straight nasdaq scalpers, especially with our new rates" so you can just bring your traders and yourselves over here.-- (small plug):)
    #10     Jan 2, 2002