I operated as a sole-proprietor for 9 months of the year, then as an LLC partnership for the last 3 months. How do I file? And which Turbo Tax version is best for me?

Level 13

Jan 26, 2020 5:58:23 AM

A few more facts would be good to provide a concise response:

You indicate "then as an LLC partnership". Are you saying that this is a multi-member LLC or are you the only owner?
If you are the only owner of the LLC, do you have employees?
If this was converted to a multi-member LLC, what property was contributed; cash, personal property, real estate, inventory, etc.
If a multi-member LLC, what did the other member contribute?

New Member

Jan 28, 2020 5:50:21 PM

Rick19744, thanks for responding. My wife and I formed a multi-member LLC, so we're 50/50 partners. We didn't have any employees in 2019. When we formed the LLC, we contributed tools and materials, but not cash. Does this help?

Employee Tax Expert

Jan 28, 2020 6:13:23 PM

You may be able to file everything on your personal tax return with a schedule C like you have been doing. This would be so if you can be considered a "qualified joint venture".

The qualified joint venture is basically an LLC that is operated by a husband and wife. You would both have to materially participate in the business and be willing to report your share of income and expenses separately on your personal tax return, schedule C. You would also have to be the sole owners of the business.

You can find out more about this by using this link:

https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorporated-businesses

If you choose to file as a qualified joint venture, you would use the TurboTax Sefl-Employed product. If you choose to file as a partnership, you will need the TurboTax Business product as well a personal tax return product, such as TurboTax Premier or Deluxe.

Level 15

Jan 28, 2020 6:52:41 PM

@kevorcam wrote:

My wife and I formed a multi-member LLC, so we're 50/50 partners.

If you and your wife are in a community property state (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin), you can elect to treat the LLC as a disregarded entity and each of you can file a Schedule C.

See https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

Otherwise, you need to file a Form 1065 (partnership return); you cannot elect QJV (qualified joint venture) status if the business is in the name of a state law entity (e.g., an LLC).

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I operated as a sole-proprietor for 9 months of the year, then as an LLC partnership for the last 3 months. How do I file? And which Turbo Tax version is best for me?