Hi there: Me and my partner created 1065 LLC this past December (12/4/23 to be exact). We didn’t have recorded revenue. We are only the members. How to proceed?

[ChrisW0503]

We only had some expenses, filing and registration fees. And is there business deductible thar may benefit us. Also, FYI, my partner has a higher W2 income than me. Should they file it to reduced their AGI or should i file it under me?

[DavidD66]

What you have are start up and organizational costs.  These costs are deductible, but not until you are actually in business.  You cannot take a deduction for those costs for 2023.  You will have to wait until 2024.  Should you end up not actually starting your business then they would be personal expenses which are not deductible.  The amount of the startup cost deduction is limited to $5,000 for the first year of business, with any remaining startup costs being amortized over a 15-year period.  However, businesses with startup costs that exceed $50,000 in total are subject to a reduced deduction limit.

As for the question:  Who should file?  If you created a multi-member LLC (more than one member) then you are treated as a partnership for tax purposes (unless you make an election to be treated as an S-Corp).  A partnership files their taxes on Form 1065 - US Return of Partnership Income.  Each partner receives a Form K-1 from the partnership to file with their personal tax return.  So if you are equal partners in your LLC, you will both file a Form K-1 with 50% of income and expenses, unless your agreement calls for a different allocation of profits and losses.   

[ChrisW0503]

In that case, we still need to file for 2023 then? For the K-1 filing, is there anything we need to file specifically despite no profit and just start up expenses? 

Also, me and my  partner are the only members that has not recognized revenue. So depending on who’s filing it, it wouldn’t matter is what we’re understanding? 

[ThomasM125]

You may not need to file the return for 2023 if you didn't have any income or deductible expenses per this excerpt from the instructions to Form 1065: Form 1065 instructions You should review the instructions to see if there are any unique circumstances applicable to you that would require you to file however.

You could file a zero return just to be sure, however, in which case your K-1 schedules would not show any items of income or expense for either partner.