Need to include expenses you paid yourself on an LLC's tax return?


1

I may have made a goof here and want to fix any problems.

I formed an LLC in 2010. In 2010 and early 2011, I paid the LLC's expenses out of my own bank account, using my own checks, and I had no other members in the LLC other than me. For 2010, I filed my own tax return and listed the LLC's expenses that I paid on Schedule C and took a deduction for them. (The business had zero income.) I didn't have a tax ID number for the LLC at least when I started preparing my return and so I didn't list it. I also didn't consider the LLC as having any capital accounts for its member, me, in 2010.

For 2011, I took in another member, got a tax ID number for the LLC, opened an LLC bank account, etc. I have prepared K-1s and the LLC's tax return, on Form 1065. (The business also had zero income that year.) In 2011, I contributed cash and the other member contributed property.

Now, oh no, I looked on the tax ID letter I got and I was to file a Form 1065 for the LLc in early 2011, apparently for the 2010 tax year. I didn't. Drat.

For 2010, can I do what's easiest and is probably the most accurate: filing a Form 1065 for the LLC, listing zero income and zero expenses for the LLC? Or do I need to go back and re-file my 2010 return, listing the LLC's tax ID number, and should the Form 1065 for 2010 reflect the LLC's expenses? That would be more complicated, and I am not sure if it's right (and it would mess up the capital accounts), since the LLC didn't pay anything itself, but I want to be compliant with the law to the letter.

LLC Tax

asked Mar 20 '12 at 21:32
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User6492
1,747 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans
  • I'd recommend talking to an accountant as soon as possible and for future to remember that you are a professional in your field not a Jack of All Trades. – Karlson 13 years ago
  • Can you clarify the difference between this question and [your other one](http://www.brightjourney.com/q/file-llc-tax-return-first-calendar-year-income-outflow)? They appear to be duplicates. – Zuly Gonzalez 13 years ago
  • Sure- I just discovered more potential problems and wanted to give more facts. I see now that I was required to file a Form 1065 and I took deductions (all of which were valid, and carefully documented). – User6492 13 years ago

1 Answer


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First, LLCs do vary somewhat by state - which you don't indicate.
Next a 1065 is a federal partnership tax return, which some LLCs may file. Since it was only you in 2010, that doesn't seem appropriate at that time. That said, if you don't make the appropriate filing when you have a choice, sometimes they make the choice for you - again this may depend on the state. But some single-owner LLCs do file properly on their personal Schedule C. So that's not clear here. If you were being taxed as an individual (sole proprieter) and took in someone else, that might make you a partnership - but it sounds like that would be for 2011.

Take all this as background and get some professional help. I think you need a lawyer more than an accountant at this point, but really both. So I agree with the previous advice.

answered Mar 21 '12 at 00:56
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Patrick Ny
300 points
  • Well put. From the IRS's point of view, LLCs are taxed the same as C or S Corps, depending on the election when you request your EIN. Just like with Corps, you are default C, unless you elect to act like an S Corp. Like @Patrick NY said -> talk to an accountant. – Madd Hacker 12 years ago

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