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New Member
posted Jun 6, 2019 2:08:16 AM

Multi member LLC without income or expenses

My siblings and I established a multi member LLC in 2016 that has no income nor expenses.  The LLC was only set up to manage a family vacation home that is not a rental.

1.  Is the LLC required to file a federal tax return?

2.  If the LLC begins to earn interest in our bank account, would be be required to file a federal tax return?

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1 Best answer
New Member
Jun 6, 2019 2:08:41 AM

Answered in comments

16 Replies
New Member
Jun 6, 2019 2:08:18 AM

An LLC is a passthrough, meaning that any net income / loss flows through to your personal return. Do you have other income from any sources?

Alumni
Jun 6, 2019 2:08:20 AM

Some states require a LLC return and an annual fee even with no income/expenses.

Intuit Alumni
Jun 6, 2019 2:08:21 AM

Is the LLC set up as a partnership or S-Corp?

New Member
Jun 6, 2019 2:08:24 AM

Levisncap89, the LLC has no additional income.  I have personal income from other sources.
Lisa995, I file an annual report with a fee to the state
TurboTaxIrene, it was set up as a partnership

New Member
Jun 6, 2019 2:08:26 AM

You will still have to file for your other income. Your K-1 (assuming you even received one) should just reflect zero passthrough. If you truly had a wash on the LLC, I would just omit reporting it on federal unless your state has fees / etc. that populate based on the flowthrough entity being present.

New Member
Jun 6, 2019 2:08:27 AM

Levisncap89, should the LLC create a K-1 if we have no income or expenses?

New Member
Jun 6, 2019 2:08:28 AM

Generally speaking, I do not create them for my clients with a net wash unless they specifically request them. Your managing partner would probably have to request them from your agent / accountant if you wanted one.

New Member
Jun 6, 2019 2:08:30 AM

Levisncap89, the LLC isn't earning interest on our funds.  If we began, would that change the scenario?

New Member
Jun 6, 2019 2:08:32 AM

If the partnership distributes the interest to you and your partners, then yes, you would have to include that income on your personal return. I'm assuming that the account generating the revenue would be held in the partnerships name?

New Member
Jun 6, 2019 2:08:34 AM

Yes, the LLC account would earn interest and the interest would remain in the LLC account.

New Member
Jun 6, 2019 2:08:34 AM

Doesn't matter if it's distributed or not. It's still taxable flowthrough in the year generated if it's taxable interest income. Partnerships don't entail entity-level taxes.

What sort of account would be generating the interest revenue?

New Member
Jun 6, 2019 2:08:36 AM

Either a DDA or savings account at a bank.

New Member
Jun 6, 2019 2:08:37 AM

Officially, I have to tell you that any interest income, even a penny, has to be reported as taxable income. CPA boards are funny about things like that.

Realistically, DDA's pay de minimus interest rates and it's doubtful you'd receive a 1099-INT unless the cumulative balance is quite substantial.  If you don't receive one, then the interest wasn't reported to IRS as income at the entity level and whether or not you report it becomes a personal decision on your part.

New Member
Jun 6, 2019 2:08:39 AM

Thank you!  I appreciate your help.

New Member
Jun 6, 2019 2:08:40 AM

No problem 🙂

New Member
Jun 6, 2019 2:08:41 AM

Answered in comments