Owner Draws - Taxable in an LLC?
My husband & his brother formed an LLC partnership with 3 people in Delaware in Oct., 2007. Since then, my husband & his brother have been taking monthly owner draws, as income. The business is based in Wisconsin but the LLC was formed in Delaware. The partners in Delaware believe that the owners' draws are loans against the company right now & we should have been taking federal, state, medicare & social security withholdings. Are they correct? I thought that owner draws were not taxable. They said that since not all of the partners were taking draws, that my husband & his brother needed to be paid as wages. PLEASE HELP!