​Meredith Is a Passive 30% Member of the MNO LLC

question 42

Multiple Choice

​Meredith is a passive 30% member of the MNO LLC.She is not a managing member and she does not participate in any activities of the LLC.Her interest is more in the nature of an investment.In the current year,Meredith's distributive share of income from the LLC was $50,000.In addition,she received a guaranteed payment of $40,000 for the use of her capital.Assume that her income from other sources exceeds $500,000.How much of Meredith's LLC income will be subject to the self-employment (SE) tax (under the Proposed Regulations) and the net investment income (NII) tax? (Disregard the additional Medicare tax.)

• A)​$0 SE tax; $0 NII tax.
• B)​$0 SE tax; $40,000 NII tax.
• C)​$0 SE tax; $90,000 NII tax.
• D)​$50,000 SE tax; $40,000 NII tax.
• E)​$90,000 SE tax; $0 NII tax.

---

Definitions:

Legal Marriage

A socially and legally recognized union between individuals that establishes rights and obligations between them.

Cultural Views

Perspectives or opinions shaped by the cultural background and experiences of individuals or communities.

Parenthood

The state or experience of being a parent, encompassing the responsibilities, joys, challenges, and changes it brings to an individual's life.

Childlessness

The state or condition of not having children, either by choice or due to circumstances.