Do I need to file a Form 1065 for a multi-member LLC if the business has not yet opened and is still under construction for 2021? Do I claim lease/build-out expenses now?

[AFoD2021]

My husband and I are starting a business and obtained multi-member LLC in 2021. No gains or losses and leasing a stand-alone unit in a town center. Unit is still under construction but expenses are paid for leasing and construction in 2021, and business cards, etc. The business is not yet open.

[ZoltanB45 · Accepted solution]

You would prepare the return, to include rent and the costs such as the marketing (business cards). However, the leasehold improvements would not be deducted until the business began operating.

[AFoD2021]

Thank you @ZoltanB45  for the help and reply!  We paid only the down payment in 2021 so far to our contractor for the build-out.  We should not claim this yet as an expense on the 2021 return?

[PatriciaV · Accepted solution]

The down-payment to your contractor is part of the business asset you are creating. The total cost will be capitalized for depreciation once the unit is placed in service (ie: you are open for business).

[AFoD2021]

Thank you @PatriciaV  for the reply!  The build-out total cost itself will wait to be deducted until the business starts, and will be amortized?  We need to complete a form to request amortization but not until business opens?  Thank you for the help!

[PatriciaV · Accepted solution]

You won't need to elect to amortize - you'll simply add the total cost as an asset for amortization for your business. Until then, keep good accounting records so you have that information ready next year.

[AFoD2021]

Great!  Thank you @PatriciaV  for the help and answers!