This subject has been covered before, but there is a new tax preparation company on this site and I'd like to hear their input on this subject. Are traders who are members of a US based LLC proprietary trading firm, and who receive a K1 form at year end, required to file a US tax return? I don't mean retail direct access traders, or W8 forms or any of that, just prop traders in an LLC. What's the difference between active and passive income with an LLC? If one is a different class member of the partnership than the owners/operators, and has no hand in running the business, how does the IRS view the trader as being connected to the partnership? If the trader has no SSN or taxpayer ID number, how would the IRS even know that you should file a return, how would they track you down? What happens if you don't file? What if you have a loss, how would you be able to claim that against anything? There is a lot of confusion on this subject among the traders I talk to who are in this situation. Any help or first hand experience would be appreciated.