For taxmama-ga or anyone competent to answer...

I'm getting ready to file the IRS form SS-4 for an EIN.  This LLC will
be used to purchase, sell and otherwise invest in real estate or
commercial interests in real property.  Therefore, even though it is
member-mangaged, we should incur no self-employment tax since a) the
IRS doesn't consider real property investment (except buying and
selling too often with 'dealer' status) a 'business' in the employable
sense of the word and b) we'll have no other employees.  I basically
want to make sure that I don't fill out this form in a 'wrong way' to
make the IRS think we're doing commerce/business instead of
investment.

I may be over-thinking the SS-4 form, but to that end, to ensure there
is no miscommunication about the type of 'business' it is, how should
I fill out the following parts of the SS-4:

9.  Reason for applying (check only one)

[ ] Started new business (specify type) > _________________________________
...
[ ] Banking purpose (specify purpose) > _________________________________

<Should I say 'started new business' or 'banking purpose' since the
LLC will be buying real property investments?>

14.  Check box that best describes the principal activity of your business

[ ]  Rental & leasing
...
[ ]  Real estate

<What is the difference?  Is the former choice better for a property
management company?  Which do I choose?>

15.  Indicate principal line of merchandise sold; specific
construction work done; products produced; or services provided.
_______________________________________________________________

<Will 'Purchase, sell, and invest in real property' suffice?>

Hi GrammatonCleric,

Thanks for asking for me. 

Actually, you're not really overthinking the form. 

And you're asking the right questions. 

You asked:

9.  Reason for applying (check only one)

 [ ] Started new business (specify type) > _________________________________

 [ ] Banking purpose (specify purpose) > _________________________________

 <Should I say 'started new business' or 'banking purpose' since the
 LLC will be buying real property investments?>


The correct answer is starting a new business. 
That's what you're doing. 

You asked:

14.  Check box that best describes the principal activity of your business

 [ ]  Rental & leasing
 
 [ ]  Real estate

 <What is the difference?  Is the former choice better for a property
 management company?  Which do I choose?>

I would select "real estate". It's general enough that you can do anything
with the properies i.e. buy and sell, or buy, rent and sell. 

You don't want your company to be considered a property management company. 
The property management business IS a business. 

You asked: 

 15.  Indicate principal line of merchandise sold; specific
 construction work done; products produced; or services provided.
 _______________________________________________________________

 <Will 'Purchase, sell, and invest in real property' suffice?>

I would say - 'invest in real property'. 

Again, the most general, or broadest answer is best and leaves
all your options open. 

I do hope this helps. 

Best wishes,

Your TaxMama-ga

---

Request for Answer Clarification by grammatoncleric-ga on 07 May 2005 15:38 PDT

Taxmama-ga,

Okay, thank you!  So, out of curiosity, why would one select 'banking
purpose' under #9?  What does that really mean?

One more thing - what if I want to use the LLC to invest in other
businesses (like becoming a limited partner in a partnership) or be a
holding company for other LLC's -- what would be the best selections
for #'s 9/14/15 ?

(sorry for the scope creep - I'll reimburse your time with a tip)

---

Clarification of Answer by taxmama-ga on 07 May 2005 16:16 PDT

Hello again. 

Thanks for the quick response. 

You asked: Why would one select 'banking purpose' under #9?  
What does that really mean?

{chuckle] Oddly enough, it means what it says. 
Sometimes, someone needs to open a US bank account for their foreign business.
Or someone just needs a bank account for an entity that does not file 
tax returns.

They would use 'banking purposes'. 

It doesn't apply to you - you have an actual business. 


Then you asked: What if I want to use the LLC to invest in other
businesses (like becoming a limited partner in a partnership) or be a
holding company for other LLC's -- what would be the best selections
for #'s 9/14/15 ?

First of all, I wouldn't change the answers for something you 
might want to do someday. Just start out this way. It's OK to change
the nature of your business as you go along. 

Best wishes,

Your TaxMama-ga

Excellent, and fast!  Thank you.