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bboggess76
New Member

We started an LLC 8 years ago. When I looked it up I thought that a husband and wife LLC could file as a passthrough entity. Now I found I was wrong. How do I fix this?

I found out because we did a 1031 exchange and had to fill out the W9 as a partnership. I argued with the 1031 company and realized my mistake. We have never filed under the LLC but have paid all the taxes under our joint tax return.
3 Replies
rjs
Level 15
Level 15

We started an LLC 8 years ago. When I looked it up I thought that a husband and wife LLC could file as a passthrough entity. Now I found I was wrong. How do I fix this?

What state are you in? A husband and wife LLC in a community property state can be treated as a disregarded entity, which is what you have been doing. If you are not in a community property state, a husband and wife LLC has to be treated as a partnership, and has to file a Form 1065 partnership tax return.


A pass-through entity is not the same as a disregarded entity. (That might be what confused you.) A partnership is a pass-through entity, not a disregarded entity.


Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

 

tagteam
Level 15

We started an LLC 8 years ago. When I looked it up I thought that a husband and wife LLC could file as a passthrough entity. Now I found I was wrong. How do I fix this?


@bboggess76 wrote:
I found out because we did a 1031 exchange and had to fill out the W9 as a partnership. 

Everything posted by @rjs is 100% accurate, but did you ever apply for an EIN for the LLC, @bboggess76?

 

If not, the IRS was almost certainly never expecting an income tax return (Form 1065) from the LLC and exactly what tax ID number did you enter on the W-9?

 

Regardless, if you did not hold the interest as community property in a community property state, you might want to consult with a tax professional, in person.

 

 

 

Mike9241
Level 15

We started an LLC 8 years ago. When I looked it up I thought that a husband and wife LLC could file as a passthrough entity. Now I found I was wrong. How do I fix this?

if you do not live in a community property state definitely see a tax pro. the penalty for failure to file form 1065 for an H&W LLC is about $5,000 per year. 

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