And for that matter, do states have their own ways of approaching this matter? I mostly would like to figure out of TurboTax has a way of noting subsidiary income/expenses or if it's just simple math.
What type of business is your S-corp? S-corp is just a tax category. Often people have a LLC (there's no tax LLC form) and elect to have it taxed as an S-corp. If that's the case then the S-corp represents how the LLC is taxed. In either case - I answered your question below!
When an LLC has one owner, the activity (income, expenses, etc.) are directly reported on the owner's tax return because the LLC is 'disregarded' for taxes. There's no form to report the activity separately.
Thanks! It's an LLC taxed as an S-corp, which owns an LLC. So if I understand you, I'll just add its income/expenses to the parent company's as if it were any other income source for the company.
Exactly, the LLC activity, income and expenses, can just be added to the 'parent' return. Sounds like you know this, but you should keep separate accounting records for the LLCs.
Awesome. I have separate company files in Quickbooks for each LLC and I will combine the totals in TurboTax. Thank you!
I would like some clarification here. Don't we need to file form 1122 if we include a subsidiary in the consolidated tax return? https://www.irs.gov/pub/irs-pdf/f1122.pdf
The Form 1122 generally applies to a C-Corporation, not an S-Corporation.
What about the parent having one EIN and the sub having another EIN? Where do you put the 2nd EIN in Turbotax?
The sub's EIN doesn't get entered in this case since all of the income is going to be attributed to the parent's EIN. The Sub doesn't file and doesn't need it's EIN submitted.
What if the sub's EIN had income reported to it on a 1099? Seems like there should be some way of reflecting that.
No, if the ownership of the subsidiary is properly reported, the subsidiary is not required to file separately or report separately. Just ensure the income reported to the sub is reflected on the parent tax returns.
Hello, I need help with some information.
I own a Business/Corporation with S Corp Tax election. It is a Holding/Managing company and owns an LLC and it is the only member of the LLC.
I know that for the S Corp I need to file Form 1120s and that I will in turn receive a K1 which I will use to file schedule E on my personal 1140 tax return.
What I don't know is how do I file the LLC return?
How do I add all the LLC's income and expenses to the Parent/Holding/Managing S Corp?
You have all the records for the LLC, income, expenses, etc. They are added in with the income and expenses of the parent. Quite literally. If the LLC has $10k income you just add it to the other income of the parent. Same with the expenses and categories.
Could you Please be more specific. your answer stated that income and expenses be reported on 1120 S. how about the Schedule C or 1065 for the LLC ? Does it have to be reported with no income or expenses? if not, how does that LLC report its existence to the IRS or State? I m trying to figure this out for my knowledge purposes only. Thanks for sharing
You file a 1120 S return. Not a Schedule C nor a 1065. You need Turbo Tax Business. You will get a K-1 or W2 from the S corp return to enter into your personal return.
Turbo Tax Business is a separate program from Home & Business. It is not available to do online or on a Mac.
You can buy the Window's version here…..
@jorgito153 wrote:
.....answer stated that income and expenses be reported on 1120 S. how about the Schedule C or 1065 for the LLC ? Does it have to be reported with no income or expenses?
S corporations, and LLCs electing to be treated as S corporations for federal income tax purposes, file Form 1120-S.
Single-member LLCs are disregarded entities and report income and expenses on Schedule C.
Multi-member LLCs are treated as partnerships by default and report on Form 1065 (and issue K-1s to their members).
S corporations must file Form 1120-S whether or not they have income or expenses.
Multi-member LLCs must file Form 1065 unless they have neither income nor expenses for the tax year.
Single-member LLCs (and sole proprietorships) file Schedule C unless they have neither income nor expenses.
If you are asking about a single-member LLC owned by an S-Corp. pretend the LLC doesn't exist (there isn't any return for a single member LLC unless it elects to be taxed as other than a disregarded entity at least at the federal level) and prepare the S-Corp as if there was no LLC
however, if the LLC has made its own S-corp election complication arise. see this thread
@AmyC
After reading the full conversation I understood that when an S- Corp owns an LLC (Parent-holding company), the LLC income is reported on other income/expenses, so in that case the sub-LLC's EIN is not reported to the IRS at all.
Does this make any sense?
Thanks, @RobertB4444
so that sounds to be a loophole in the system to hide some income from the LLC, for example, if the LLC gets a 1099
anyone please advice
A subsidiary is really just part of your company. If you want it spun off or accounted separately then it needs its own EIN and then it files its own tax return. Otherwise its all just one company.
So the only loophole is just not reporting some of your income. Which feels like its the same loophole as always. As long as you don't mind risking an audit.
@Jac123 wrote:so that sounds to be a loophole in the system to hide some income from the LLC, for example, if the LLC gets a 1099
If the LLC gets a 1099 with what TIN (Tax ID number) on it?
There is no loophole as the IRS will also receive the 1099 and expect someone (or some entity) to report the income.
so how will the IRS match the 1099 with the income reported on the parent entity if no EIN from the LLC is entered on the parent company tax return?
@Jac123 wrote:
so how will the IRS match the 1099 with the income reported on the parent entity if no EIN from the LLC is entered on the parent company tax return?
EINs are tied to some other TIN and, in this case, it may be tied to the parent company's TIN (the S corporation).
Regardless, the 1099 will contain someone or some entity's TIN and the IRS will issue correspondence if the figures on that 1099 are not matched somewhere (or not reported).