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windwrd01
Returning Member

I turned a sole-proprietor into an LLC in Arizona a communal property state. Do I need to separate business expenses into separate Schedule C or can I just file one?

We each own 50% in the LLC but I'm the Manager. She does not work in the LLC in any way. The business had no profit for the year and will incur a large loss. What are the implications if I just file one Schedule C? My spouse is a fulltime student and does not work.

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KarenL2
Level 5

I turned a sole-proprietor into an LLC in Arizona a communal property state. Do I need to separate business expenses into separate Schedule C or can I just file one?

Since you are a multi-member LLC in Arizona (and both members are spouses), you will have to file two Schedule Cs, one for each of you.  You will split the income and deductions 50/50 on each Schedule C.

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5 Replies
KarenL2
Level 5

I turned a sole-proprietor into an LLC in Arizona a communal property state. Do I need to separate business expenses into separate Schedule C or can I just file one?

Since you are a multi-member LLC in Arizona (and both members are spouses), you will have to file two Schedule Cs, one for each of you.  You will split the income and deductions 50/50 on each Schedule C.

View solution in original post

windwrd01
Returning Member

I turned a sole-proprietor into an LLC in Arizona a communal property state. Do I need to separate business expenses into separate Schedule C or can I just file one?

How do I split the expenses 50/50 when they are from multiple sources?
KarenL2
Level 5

I turned a sole-proprietor into an LLC in Arizona a communal property state. Do I need to separate business expenses into separate Schedule C or can I just file one?

All the business expense for the LLC would be split 50/50 regardless of the source of the expense.
windwrd01
Returning Member

I turned a sole-proprietor into an LLC in Arizona a communal property state. Do I need to separate business expenses into separate Schedule C or can I just file one?

I understand that so do I take each line item and divide by two? Do I do the same for COGS?
KarenL2
Level 5

I turned a sole-proprietor into an LLC in Arizona a communal property state. Do I need to separate business expenses into separate Schedule C or can I just file one?

Yes.  That's exactly correct.
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