- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Business & farm
You were either misinformed, or misunderstood the information you were provided.
A multi-member LLC is *required* to file a 1065 partnership return. However, there is an exception for a community property state.
In a community property state you can still file the 1065 and issue each owner/partner a K-1. But if the below conditions are met, you have the option for each owner to split all business income/expenses right down the middle and each owner file a SCH C reporting their half of everything. This is allowed by the IRS if "ALL" of the following conditions are true.
1) There are only two owners of the multi-member LLC
2) The two owners are married to each other as of Dec 31 of the tax year.
3) The two owners who are married to each other will be filing a joint tax return.
So there's nothing wrong at all with you having filed the 1065. Even on the K-1's all of your income/loss is split down the middle anyway, unless your written partnership agreement filed with the state specifically and explicitly states otherwise, and anything other than a 50/50 split is legally valid in your state.
Besides, it's easier and simpler in a community property state to go the 1065 route anyway. Makes things simpler when the unexpected happens - such as the death of a partner, a partner sells or otherwise transfers their share of the partnership to another, or an additional partner is taken on making the number of partners more than the two who are married to each other and filing joint.