The only point of Federal Form 8332 is to allow the LLC to be taxed as at the Federal corporate tax level of 21% versus being taxed as a pass through to the personal tax rate. If your situation is that it is advantageous to be taxed at 21%, you file Form 8332. If not advantageous, you do not file for the Form 8332 election. The decision is driven by you personal tax rate.
My point is that TurboTax does not seem to allow for a State (Kentucky) to want to continue to tax the LLC as a pass through to personal tax filing.
As to a responder's comment earlier, the instructions for Form 8332 say nothing about the initial election business liquidation and distribution of proceeds after taxes being limited to the first year of election. The concept is that if there is a profit, that profit is taxed at the corporate rate of 21%, then the balance of profit is available to be distributed as a post-Federal-tax distribution to the stockholder, as if the business was liquidated. The next tax year, the process starts over again in each subsequent year. This is similar to a Sub-S corporation, except the Federal taxes are paid directly by the LLC (corporation). If this were not true, there is no point to Form 8332.
What needs to happen is that the LLC, with a Form 8332 Election, pays the Federal taxes on Form 1120 and then the LLC's profit is taxed on the State level on the personal income tax return. The Federal 1040 does not show the income on the personal return.
TurboTax either has a version that allows this or needs to be updated to allow this.
