QUESTION

Can my two partners in our LLC force me to pay taxes on money I have not received.

Asked on Feb 04th, 2013 on Business Law - Washington
More details to this question:
6 years ago I bought into a bodyshop that was struggling and about to go under. I changed the way they did bussines and built a new building to handle the addtional work, We became very profitiable in a very short time. However 3 years ago my two partners decided to vote me out of the ability to work at the company so I went on to manage a large corperate chain of bodyshops. The first year they voted me out I paid taxes on 11k that I didn't receive, the secound year I paid taxes on 29k, that I didn't receive and now they are telling me that I may have to claim money again on this years taxes. I'm aware that they have the right to keep me from drawing a employement check from the place but at the end of the year do I not have the right to receive money as profit? especialy if it shows up on my taxes that I received it and have to claim the income. Now 6 years later they have now offered to buy me out for the same money I bought in for.....
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1 ANSWER

Family Law Attorney serving Kennewick, WA at Ashby Law PLLC
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Mr. Pierce:  Do you have a written LLC agreement?  Your agreement should shed light on your questions.  Whether it does or not, you should have an attorney review your situation to make sure (1) whether or not you are liable for taxes; (2) whether or not you are entitled to income that the other owners have not been paying to you; and (3) whether or not you should get out.  It seems to me that you should not pay taxes on money you do not receive.  You may have paid taxes on their income and may be entitled to get that back. Good Luck!
Answered on Feb 06th, 2013 at 4:04 PM

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