I recently started an LLC with a business partner and quickly realized it was a mistake and we are in the process of having his name removed from the company. As no work was performed by this individual, he shall receive no income from the company. As such, he shouldn't be taxed on the company earnings as an individual. It was my assumption that no salary meant no taxable income, but I just read an article from Entrepreneur and now I'm not sure my information is correct. Specifically, the article states the following:
Each member's pro-rata share of profits represents taxable income--whether or not a member's share of profits is distributed to him or her.
What can I do to ensure this individual is not unfairly taxed for income he did not receive?