Response to your question(s):
- Report it on line 14 with all other taxes
- Since you are on the cash basis, report this expense when paid
- The language you are referencing will come into play if a taxpayer is on the "accrual" method of accounting. There are several additional factors that would come into play as well, but this does not apply to you being on the cash method of accounting.
- Using the cash method of accounting with an LLC taxed as a partnership can be tricky. Hopefully you are profitable. If you are allocating losses to the members I would recommend getting some professional input. There is a missed / overlooked rule where a partnership / LLC taxed as a partnership cannot use the cash method of accounting if more than 35% of the losses are allocated to limited partners or limited entrepreneurs. This provision is within the definition of the tax shelter rules. This is just a heads up and outside of your specific question.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
