I don't expect any income reported for my YouLand investment this year, so why did you need my social security number or EIN?
When you participate in a YouLand deal, you become a member of a limited liability company (“LLC”) that is taxed as a partnership. Partnerships are not subject to taxation as the income, deductions and/or credits merely flow through to the individual partners. However, each partnership is required to file a tax return and list all partner information such as name, address and social security number. So even if you do not expect immediate taxable income to flow through to you, you are required to furnish the information for IRS compliance.
Does YouLand withhold taxes prior to making monthly or quarterly distributions to me?
It depends. Some states require a withholding on distributions or income that is passed through to investors. Any state withholding will be reflected on your K1 at the end of the year.
What's the difference between the kind of taxes I might pay on equity flip projects versus longer-term equity rental projects?
A flip project will generally be taxed as ordinary income that is subject to the investor’s marginal tax rate. This is because a flip is classified as a “dealer” and is deemed to be in an active trade or business.
A long-term rental is defined as passive income and is subject to the passive activity rules. These rules allow you to offset passive income against passive losses. Any resulting net passive income will be taxed at ordinary income tax rates. In addition, upon the sale or disposition of a rental property, capital gains (or losses) will be generated that will be classified at a preferable long term capital gains rates.