Should I file form 1065 with IRS for a multi-member LLC for 2018 if the only expenses were startup? It is now Sep 2019 and we have yet to open for business, still in dev.

[management1]

Expenses in 2018 were for registration with state of TN and some basic office supplies and business logo development. 4 member LLC is husband, wife, and two daughters. Expenses were paid by husband and wife's personal funds, not from any capital invested to the LLC. I would rather defer any deductions incurred in 2018 for tax year 2019. We capitalized in 2019 and are using those funds for 2019 expenses with 2018's expenses on record as a loan to pay us back. Earlier this year, I did file a form 7004 for extension for the 2018 tax year in case I decided to file but now, if I can defer to 2019, I prefer it. Thank you.

[Anonymous_]

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@management1 wrote:
Expenses in 2018 were for registration with state of TN and some basic office supplies and business logo development. 4 member LLC is husband, wife, and two daughters....

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Domestic partnerships, including LLCs, must file Form 1065, unless they neither receive income nor incur any expenditures treated as deductions or credits for federal income tax purposes.

See https://www.irs.gov/instructions/i1065#idm140538038032800

[Anonymous · Accepted solution]

since you filed for an extension, you have until 9/15/2019 to file without penalty.   after that late filing penalties are about $200 per month per member.    

I would treat the expenses paid by H&W as a capital contribution to the LLC. 

section 195  - start up costs

the taxpayer shall be allowed a deduction for the taxable year in which the active trade or business begins in an amount equal to the lesser of

from form 1065 instructions

Domestic Partnerships Except as provided below, every domestic partnership must file Form 1065, unless it
neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes. Entities formed as LLCs that are classified as partnerships for federal income tax purposes have the same filing requirements as domestic partnerships

so I would say technically if the LLC did not begin doing business 2018 there would be no allowable 195 deduction.  if no other deductions for 2018, and no income  (loans are not income),  then a return would not be required.

having said all that, you filed an extension so the IRS may issue you a notice as to why you didn't file a 1065

I would avoid the headache and file.   

[management1]

Thank you for your reply 🙂 

I was feeling that I would not have to file a reply based on what you shared which is what I have also read online. In March of this year, I was unsure so filed a 7004 extension. That is what concerns me the most because like you said, the IRS would be expecting me to file. Any suggestions on how best to notify the IRS that I will not be filing? Is it just sending (by certified mail with return receipt) a written letter to the IRS with explanation along with copy of the 7004 I sent in March? Or are you aware of a more formal procedure for this?

Thank you again.

[Anonymous_]

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@management1 wrote:

Or are you aware of a more formal procedure for this?

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There is not exactly a formal procedure.

If you do not file, you will have to wait for a CP259 (or whatever form, if any is sent at all) notifying you that a return was not filed and then respond to that notice to the effect that a return was not required to be filed for the tax period in question.

[Critter]

When you applied for the EIN for the partnership the IRS told you to file a 1065 each and every tax year until it closes ... so mail in a zero income return if nothing else to avoid any problems in the future.

[Carl]

When you register a business with the state (any state, as far as I know) you can register the business with a status of "active" or "inactive". I know for my state of FL when you register online, the default is "active". When registered as active, you are affirming that the business is "in fact" open for business. So if your state taxes personal income they are expecting to receive a return for that business. If they don't, they question it of course. But if you do the initial registration as "inactive" that basically reserves the business name so that no one else can use it, and also allows you to do those "start up" things that may need to be done before you can actually open for business. For example, get the federal EIN (and state ID number if required by your state) as well as open a business banking account.

So if you registered your business with a status of "active", I would normally tell you to file a tax return, even if it's all zeros. But at this point, forget it since you're talking about tax year 2018. The late penalty for filing the 1065 is $200 per month, per partner. So with a minimum of two partners your penalty is already up to $2,000 and goes to $2,400 on Sep 16th.
So for now, leave well enough alone and if questioned on it, simply reply (formally of course) that your business was not open in 2018.

[Anonymous_]

There would be no penalties for late filing since the OP filed an extension; the return is not due until September 16th.

[GeneK]

I set up a LLC on 12-20-19 and only have start up and training expenses. How do I complete Form 1065 as I am unfamiliar with some of terms and questions.?

[DianeC958]

If you filed for a Federal ID Number the IRS sent you a letter with that information and the form you are required to file along with a due date.

If it is an LLC has more than one partner then you would report the income and expenses on the form 1065.  If you organized a single member LLC then you report the income and expenses as part of your personal return.

The program will ask you when you organized as a business, for a business code (based on what business you are in), if you are a cash basis taxpayer.

You need to enter the information for all of the partners with their names Social Security numbers, addresses and the percentage of ownership.

Schedule B on the form 1065 alone has 25 different questions that you need to address.

You add any income and expenses for the year.

The program will produce a K-1 for each partner and that information will need to be included on their personal tax return.