I have an LLC that is taxed as a partnership. The LLC builds and sells spec homes. Do the members pay social security tax on the net income?
Partners are subject to self-employment tax on their flow-through income. Even though you are dealing with property, the homes are inventory to your particular business and the sales of that inventory should be classified as ordinary income (and subject to self-employment tax). If you are looking to have the gain on the sale of the spec homes be capital gain, you have an uphill battle.