Business Formation

Generally not. Interest income is defined as portfolio income, not passive income. Portfolio income includes interest, dividends, and gains on the sale of investment property. Passive K-1 losses can only be used to offset other passive income, except when the $25,000 special loss allowance for persons with active participation in rental real estate entities can be utilized.

No. There is no limit on the number of owners (members) for a LLC or a Limited partnership or a C Corporation. There are limits for S Corporations and Sole Proprietorships.

A single member LLC files as a disregarded entity on a Schedule C. It does not file as a Form 1065 Partnership tax return.

No. There are no citizen requirements for LLC's, Limited partnerships, Sole Proprietorships or S Corporations. There are citizen requirements for S Corporations.

Yes. LLC's have similar liability limits as do C or S Corporations. Sole Proprietorships and Limited Partnerships are personally liable for business liabilities.

A LLC similar to S Corporations, Limited partnerships and Sole Proprietorships report theor profit or losses on there personal tax returns.

If you have a business that generates a big profit over and above what you would consider reasonable compensation for the services that the owners provide, you may be unnecessarily subjecting the profits to self-employment taxes if you are operating as an LLC taxed as a partnership.
If you think your business may fit this description, your LLC may benefit from choosing to be treated as an S corporation under the tax laws.
To have your LLC receive the tax treatment of an S Corp, you must file an election with the IRS using Form 2553. You must file Form 2553 within the first two months and fifteen days of the beginning of the tax year in which the election is to take effect.
There are drawbacks, however, so no decision should be made without discussing your own situation with a qualified professional.

An advantage is that it is a way to combine the financial abilities and skills of several different people. Some disadvantages are that the general partners are liable for the actions of the other partners and a partnership is not that easy to get out of. Speak to your local CPA about selecting the best entity for your purposes.

Some advantages are that it avoids certain S corporation restrictions. It also avoids double taxation of profits.
Some disadvantages are that it is currently considered a relatively new business entity with little case law or regulatory law currently available.
There is inconsistent treatment from state to state. The entity must have at least 2 owners.
Speak to your local CPA about determining the best entity choice to fit your needs