LLC Taxes

[carroll-j-1]

I have a piece of commercial property, one building and adjacent land, that I have been renting out. I have been paying taxes using TurboTax Premier. This year my wife and I set up a sole proprietorship LLC. The paperwork was completed 12/21/2021 including a title transfer for the property to the LLC.

Rent was paid at the beginning of December before the LLC was initiated. Do I need to file a tax return for this LLC for 2021? If I do need to file a return, I’m assuming I need the Self-Employed Personal & Business.

I did pay a lawyer to set the LLC up. Can this cost be applied to the 2022 tax return or would we be required to report on the 2021 return?

I intend to rent RV storage space on the adjacent land so I’m installing a fence. I signed a contract on 12/09/2021 with half payment down but because of timing and material shortages the fence is not going to be completed till mid-March 2022. I’m assuming this cost would need to be amortized but do we split the cost between 2021 and 2022?

If it makes any difference, I’m in Missouri.

[AliciaP1]

No, you do not need to file a 2021 tax return for the LLC.  You should include the December rent on your Schedule E with the transactions from the rest of the year. 

Since your LLC is a Single-Member LLC, you can use TurboTax Self-Employed Online or TurboTax Home and Business to complete your taxes in 2022.

Your Start-Up Costs, including your lawyer fees to create the LLC, should be accumulated with any other costs you incurred for the LLC before it was set up and capitalized into an intangible asset that will be deducted/amortized according to the IRS rules outlined in Publication 535.

The cost of the fence should be added as an asset once it is complete in 2022.  

[tagteam]

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@carroll-j-1 wrote:

This year my wife and I set up a sole proprietorship LLC. 

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Just a quick note here (for the period going forward):

The proper term for an LLC that has only one member is "single-member LLC" (which is treated, for federal income tax purposes) as a sole proprietorship.

If you and your wife are both members of the LLC, it is a "multi-member LLC" and, since you and your wife reside in Missouri, the LLC will be required to file a Form 1065 (as the default classification for this type of entity is a partnership).