Question about filing for a dissolving LLC

[andrewflowers12]

Hello everybody

I have a personal sole member LLC I filed in Arizona earlier this year. The LLC has only made revenue o $400 and I have realized that I no longer want to maintain it.

Once I filed a dissolution with the state of arizona, what next steps should I take with filing the taxes since it would be reported on my personal income. Do I need to just report the taxes on my personal return?

And, how would this factor in if I didn't make more than $12,000 for the entire 2020 calendar year? I'm a college student trying to figure out what and when to file.

Thanks!

[Anonymous · Accepted solution]

whatever activity there was in 2020 gets reported on your 2020 return.  the activity gets reported on schedule C.  if this your only income in 2020 and the net schedule C income is under $400 you don't even have to file.   if you are entitled to either the first or second stimulus, but haven't or don't get them, you'll probably need to file some form of return. 

[Carl]

Regardless of the income amount, if the business carried inventory, had assets, or claimed any vehicle use, you must file SCH C to show the disposition of all inventory, assets, and vehicle use - even if that vehicle use was less than 100% business use.

Closed SCH C Business

You need to report your business as "sold or otherwise disposed of".

Start working through your business "as if" you still own it. On the 2nd or 3rd screen in select the option for "I sold, closed or otherwise disposed of this business in 2019". If prompted for the date, enter the day after you last day of business in 2019.

If your business had no income in the tax year, you can not leave the business income section blank. You 'must' enter a digit, even if that digit is a ZERO.

If you had no business expenses, then you can leave that blank and don't even have to work that section through, if you don't want to.

If your business carried an inventory, the end of year (EOY) inventory must be zero. If it's not, then in the COGS section (Inventory/Cost of Goods Sold) indicate that you removed the entire remaining inventory for personal use. That effectively makes your EOY inventory balance, zero.

If your business had assets, then you must show the disposition of those assets. In the Business Assets section work through each individual asset on at a time, and select YES on the screen, "DId you stop using this asset in 2018?". Then on the next screen, "Special Handling Required?" if you sold the asset, select no and you will be prompted for your sales information on that specific asset. If you did NOT sell the asset, click the YES button. You must do this for each individual asset listed, even if it's already fully depreciated.

If you claimed any vehicle expenses in your business at any time from the day you opened your business, then you must most show the disposition of that vehicle. Work through the Business Vehicle Expenses section and indicate that you stopped using that asset in the business, when prompted. Then show your disposition of that vehicle. Most likely, you'll indicate that it was removed for personal use.

Once you have done all the above, that will make the 2019 tax year the last year you will file a SCH C for this specific business.

[andrewflowers12]

Thank you Carl. I understand all those steps I guess my question is as the business was filed and is closing this year (2020), would I have to wait to use the TurboTax for 2020 as the fed would be filed on my own personal return for the 2020 tax year.. and thereby force me to wait to dissolve the LLC until the end of the 2020 calendar year?

Hope that makes sense