I own an LLC with my brother. how do i need to file if we didn't do business in 2016? it is a farm. and the only expenses were 2015 tax return prep.

[AmyT · Accepted solution]

You will need to file a return for the LLC this year.  When you get a taxpayer identification number (TIN or EIN), the IRS adds the business to their system and will look for a tax return to be filed for that EIN.  If one is not filed, you may be subject to notices and failure to file penalties.

Since there were two members in the LLC, then the default taxable entity is a partnership, and you are required to file Form 1065 for the LLC.  If a 1065 is required, K-1 forms will be generated to report the pass-through income on your personal returns.

Note:  There is an election available for a LLC to be treated, for tax purposes only, as a C corporation or a subchapter-S corporation.

You are only allowed to deduct expenses in the year that you paid them.

You should report the 2016 expenses on the LLC's income tax return even if you do not have income.