Quote:
Originally Posted by LIforrelaxin
When it comes to interest and dividends why should a LLC or any bussiness for that matter be sheltered when the common Joe is not. That just tells me if I am going to move to NH, I want to start my own little family bussiness, and make sure it holds all my assetts that generate interest and dividend income. In short I believe the state is trying to close a loop hole it created.........
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I think you may be mis-understanding the issue - the issue is that the State of NH - in the middle of 2009 - established a tax on LLC's and Partnerships - retroactive to 01/01/09 that taxes LLC's and Partnerships on the "distributions" that the owner's take in excess of what the State of NH deems is reasonable compensation for the owners. So if you owned an LLC that say made $100,000 for 2009, and as an owner you distributed the $100,000 to yourself - then the State of NH comes in and says well your reasonable compensation is only $50,000. Suddenly under the new law - your pay 8.5% business profits tax on the $50,000 - and you pay a 5% interest and dividends tax on the $50,000 excess you distributed from your business to yourself. So under the new law - NH allows you a "reasonable deduction" of $50,000 - you pay $4,250 in BPT tax and $2,500 in I&D tax - thats 13.5% rate on your $50,000 of "profit". This is a very simplified example - but shows the punitive nature of the new rules - also I do not know of any other state un USA that taxes its business's at a potential rate of 13.5%.