S corp with 100% ownership of LLC - specifics on how to put LLC income/expenses on 1120-S

[beleaf]

I saw this post with some explanation but I would like to make sure I understand clearly:

1) The income of the LLC gets reported as "Other income."

2) The deductions of the LLC gets reported as "Other deductions."

3) In the attached statement, I do not need to break down the income/deductions granularly (like receipts/COGS/etc for income, wages/rents/advertising/etc for deductions). I only need to report what the total income and total deductions are.

Is this correct?

[beleaf]

@RobertB4444 @AmyC @Mike9241 Perhaps you two can chime in here since you posted on the discussion I linked?

[AmeliesUncle]

The Single Member LLC is "disregarded" for income tax purposes.  Treat it exactly as if the owner (the S-corporation) had that income and expenses.

[beleaf]

So I would line by line combine the LLC's income/expenses with the owner's income/expenses? For example, advertising expenses from the owner and the LLC get combined to one figure and put on the advertising line on the 1120-S. And revenue from both owner and LLC get combined and put on the gross receipts line.

[Mike9241]

what do you mean by owner's income/ expenses?

if the s-corp received $10K in dividends from stock it owns then it gets reported on the s-corp

if the s-corp owner owns the stock that pays the $10K dividend it's not reported on the s-corp but on the taxpayer's 1040

[beleaf]

The owner is the S-corp that files the 1120-S.

My main confusion is exactly how to report the LLC's income/expenses on the 1120-S.

I've seen people say income from the LLC gets reported on the "Other income" line of the 1120-S, which sounds to me that then the LLC expenses would be reported on the "Other expenses" line of the 1120-S.

I've also seen an example where someone put the LLC's net profit in the "Other income" line of the 1120-S.

I'm also seeing people say to add income/expenses as if they were income/expenses of the S-corp, which I would take to mean the LLC's income and the S-corp's income are added together and the combined amount gets reported on "Gross receipts" line of the 1120-S. And the equivalent with expenses, e.g. combine advertising from the 2 companies and put it on the "Advertising" line, combine wages for the 2 companies and put it on the "Salaries & wages" line.

Which is it?

[Rick19744 · Accepted solution]

Doesn't appear that there was any follow-up response here:

• @AmeliesUncle response is correct.
• Since the LLC is owned 100% by the S corporation, it is treated as a disregarded entity.
• As such, all income, expense, gain, loss, etc. is reported directly on the S corporation form 1120-S.
• I would not recommend netting anything; not popular with the IRS.
• Other than no netting of the LLC activity, how you report that is up to you.  Since the facts are limited, we have no idea of the interplay of the two businesses.  Just make sure that the character of the income, loss, etc remains the same as it flows out to the shareholder(s) on the respective K-1.

[beleaf]

Thanks for that, it clears it up a lot that 1) there's no one way to report it, and 2) it's better not to simply put the LLC's net profit/loss but instead to make sure the LLC's categories of income/expenses are somehow visible, whether combined with the S corp's categories or on a separate statement. Appreciate your clarification!