|
Posted by Bernard S on April 2, 2007, 6:17 pm
Please log in for more thread options >>> FSPar...@sbcglobal.net wrote:
>>>> In February 2006, I and my wife formed an LLC in Texas. We
>>>> both are partner and started a business in September 2006.
>>>> My wife manages this business while I work for another firm
>>>> full time. Normally we file 1040 every year as married
>>>> filing jointly.
>>>>
>>>> In the business she has not drawn any salary as we are still not
>>>> breaking even in new business. Our payroll is done by payroll
>>>> company and has already issues W2 for all employees.
>>>>
>>>> We have not filed any forms such as 8832 with IRS so far.
>>>>
>>>> The following are the questions:
>>>> 1: What forms do I file for LLC? From turbo tax site, it
>>>> appears that we need to file 1065 for LLC
>>> Correct. 1065 is the default for an LLC.
>>>> 2: Since we have lost money in year 2006. Probably there is
>>>> no tax that we have to pay. However, can be use this loss
>>>> as deduction for our personal tax filing (in 1040)?
>>> Yes, to the extent you have basis (read "investment") in the
>>> LLC. This amount will show on the schedule K1 from the 1065.
>>>> 3: If the LLC filing and personal filing (1040) are
>>>> independent, where is the connection made? In other words,
>>>> if there is a loss how is it carried to 1040?
>>> Both are required, and see above re the K1.
>>>> 4: If the loss is not carried to personal filing, is it
>>>> offset by only future LLC profit?
>>> If your basis is insufficient to allow any loss on the 1040,
>>> then yes.
>>>> 5: Finally, what software would you recommend? For last
>>>> five years, I have used Taxcut. I have used quickbooks for
>>>> accounting for LLC. If Turbotax is recommended, would I need
>>>> separate programs for LLC and personal filing or it comes in
>>>> one package?
>>> software? The kind a tax accountant will use. In your
>>> particular case, I strongly urge you to avail yourself of
>>> the services of either a CPA (certified public accountant)
>>> or an EA (Enrolled Agent) for at least the first year's LLC
>>> return. If you need recommendations in your area, just let
>>> us know.
>> Where does the at risk rules apply to a sole proprietorship
>> (aka sch C or single member LLC.) Isn't a husband and wife
>> only LLC effecticely the same as a single member LLC and
>> thus has no tas consequences.
> There is no entity restriction on the at-risk rules. They
> apply to a sole proprietorship just as much as to a
> flowthrough entity. It's just less common for a sole
> proprietor not to be at risk. Doesn't mean it can't happen.
You incurred a real losses. You covered such loss with your
own funds or borrowed funds. Your borrowed , aren't you at
risk ubtil repaid.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap