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se58
New Member

I have a failed LLC (no assets, no income, just debt) that I am going to let expire and dissolve. How do I report this to the IRS correctly?

 
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3 Replies

I have a failed LLC (no assets, no income, just debt) that I am going to let expire and dissolve. How do I report this to the IRS correctly?

Don't need to do anything if you're the only member.......otherwise file a final 1065.

Carl
Level 15

I have a failed LLC (no assets, no income, just debt) that I am going to let expire and dissolve. How do I report this to the IRS correctly?

If this is a single member LLC and you TRULY have no income or expenses to report for the tax year, you can file a final SCH C-EZ with any flavor of the desktop version of TurboTax, or with the online version of Premier. To file the SCH C-EZ with TurboTax you can not claim one single penny of expenses, and the reported income must be less than $5K. I don't see that as an issue for you.

Basically, you are not reporting the sale of the business. You are reporting the "disposition" of the business. In your case, the disposition is that the business was just closed/dissolved. Now in the year of sale or disposition, any and all losses can be taken against other ordinary income. So if you have any W-2 income that could reduce your taxable amount.

But do understand that since a single member LLC is considered a disregarded entity, any debt of the business is "your" personal debt and doesn't just "go away" because the business was closed. On that front you may still have a legal liability for that debt on the personal side of things.

Also, if your state taxes personal income you may not be able to get away with just not reporting it either. You also need to check your state's website for the procedures for closing/dissolving the business. Otherwise, the state may come looking for you (i.e.; your wallet) 24-36 months down the road.

If it's a single member LLC registered in FL then let me know. I can help you with closing it properly at the state level so the FL ST Division of Corporations doesn't come looking for you and your wallet in about 24 months. (In FL, you can be they will hunt you down too!)

 

I have a failed LLC (no assets, no income, just debt) that I am going to let expire and dissolve. How do I report this to the IRS correctly?

Not required to report a disposition of a business on SCH C-EZ or C.

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