Do I declare tax deductions for LLC startup expenses on both my personal income statement and LLC tax statement?

[unlocked_academy]

Thanks in advanced,

I setup an LLC with a tax structure as an S-Corp back in September 2019.  I used personal income to cover the costs to start up the LLC (approximately $4,000).  The LLC has not yet begun selling product, however I am aware that I must prepare the LLC's taxes for the 2019 tax year. 

My question(s) are:  Can I declare the $4,000 as a tax deduction on my personal tax statement? Or should only declare it as a loss on the LLC tax statement?  Can I declare it as a tax deduction for my personal taxes and as a loss for the LLC tax statement?

Thanks so much for your time!
Respectfully,
Andrew B.

[Critter · Accepted solution]

My question(s) are:  Can I declare the $4,000 as a tax deduction on my personal tax statement?  You can NEVER double dip.... expenses  ONLY goes on the corp return.   However the seed money you infused into the business  is not income nor a deduction ... it is an increase in your basis. 

Or should only declare it as a loss on the LLC tax statement?  Again it is not a "loss" ... what you do report is the expenses the business incurred ... what the seed money paid for ... like if you paid for supplies, inventory, etc. 

Can I declare it as a tax deduction for my personal taxes and as a loss for the LLC tax statement?  Again... no double dipping allowed.    

If this is your first Scorp return I highly recommend you seek local professional assistance to get educated on these basic accounting theories  and how to complete a corporate return ... and if this is the 2018 return it is now VERY late and the penalties are piling up. 

[unlocked_academy]

Thanks for the clarification :). 

[Anonymous]

you elected S-Corp taxation for your LLC.    unless you understand the tax rules with an S-Corp you would best use a pro to prepare the return for the first year.   The return that must be filed is an 1120-S which if its using a calendar year will be due 9/15/2020.    the start up expenses are to be reported on the return but no deduction is allowed for these expenses until the business actually starts operating.     if this isn't until 2020 , that's the year these expenses will be deductible.  some other things with an S-Corp.   the need to take a reasonable salary  (if operations don't begin until 2020 or are minor in 2019, the IRS probably won't say anything if no salary is taken in 2019) . thus payroll tax returns and a W-2 will need to be filed.    have health insurance?   proper handling is necessary if you want to get a deduction that reduces adjusted gross income.  do it wrong and the insurance will only be deductible on schedule A as a medical expense.  you are an employee of the S-Corp, and some states require that all employees be covered by workmen's compensation insurance.     There are many more things  that have to be considered.     if you decide to do the return yourself, you will need a windows PC and buy the business TT software.  you'll also need to use different TT software for your 1040.  

[Critter]

The return that must be filed is an 1120-S which if its using a FISCAL year that started in 9/19 and ends August 31, 2020 will be due 11/15/2020.

If you are going to choose a CALENDAR year then the first short year return is due 3/15/20 .. so please seek local professional assistance in either bookkeeping and/or tax prep to get educated ... the penalties for doing things incorrectly or late are severe.

https://www.aicpa.org/interestareas/tax/resources/compliance/downloadabledocuments/due-dates-summary...

[Carl]

I setup an LLC with a tax structure as an S-Corp

So for tax purposes, the bottom line is, you have an S-Corp. When you file the 2115 to have the IRS treat your LLC "like an S-Corp" for tax purposes, then the business is required to follow all the laws of your state that apply to an S-Corp, 100%. That means quarterly filings, yearly registrations, required minimum draws by all owners/members, and in most cases constant paperwork that never ends depending on what the business does.

Basically, your S-Corp will file it's own physically separate 1120-S Corporate tax return. Then a K-1 will be issued to all owner's of that S-Corp which each owner will need in order to complete their personal 1040 tax returns.

Corporate tax returns are due March 15. With an extension it's due Sept 15th. The penalty for filing late is $200 per month, per owner/member.

So you may want to get professional help in your local area and get educated on this. Paying for professional help to learn is one heck-of-a lot cheaper than paying the IRS and learning the hard way after the fact.