topic Multi member LLC without income or expenses in Business & farm

Multi member LLC without income or expenses

klmedlin — Thu, 06 Jun 2019 09:08:16 GMT

My siblings and I established a multi member LLC in 2016 that has no income nor expenses. The LLC was only set up to manage a family vacation home that is not a rental.

1. Is the LLC required to file a federal tax return?

2. If the LLC begins to earn interest in our bank account, would be be required to file a federal tax return?

An LLC is a passthrough, meaning that any net income / lo...

levisncap89 — Thu, 06 Jun 2019 09:08:18 GMT

An LLC is a passthrough, meaning that any net income / loss flows through to your personal return. Do you have other income from any sources?

Some states require a LLC return and an annual fee even w...

Lisa995 — Thu, 06 Jun 2019 09:08:20 GMT

Some states require a LLC return and an annual fee even with no income/expenses.

Is the LLC set up as a partnership or S-Corp?

IreneS — Thu, 06 Jun 2019 09:08:21 GMT

Is the LLC set up as a partnership or S-Corp?

Levisncap89, the LLC has no additional income. I have pe...

klmedlin — Thu, 06 Jun 2019 09:08:24 GMT

Levisncap89, the LLC has no additional income. I have personal income from other sources.
Lisa995, I file an annual report with a fee to the state
TurboTaxIrene, it was set up as a partnership

You will still have to file for your other income. Your K...

levisncap89 — Thu, 06 Jun 2019 09:08:26 GMT

You will still have to file for your other income. Your K-1 (assuming you even received one) should just reflect zero passthrough. If you truly had a wash on the LLC, I would just omit reporting it on federal unless your state has fees / etc. that populate based on the flowthrough entity being present.

Levisncap89, should the LLC create a K-1 if we have no in...

klmedlin — Thu, 06 Jun 2019 09:08:27 GMT

Levisncap89, should the LLC create a K-1 if we have no income or expenses?

Generally speaking, I do not create them for my clients w...

levisncap89 — Thu, 06 Jun 2019 09:08:28 GMT

Generally speaking, I do not create them for my clients with a net wash unless they specifically request them. Your managing partner would probably have to request them from your agent / accountant if you wanted one.

Levisncap89, the LLC isn't earning interest on our funds....

klmedlin — Thu, 06 Jun 2019 09:08:30 GMT

Levisncap89, the LLC isn't earning interest on our funds. If we began, would that change the scenario?

If the partnership distributes the interest to you and yo...

levisncap89 — Thu, 06 Jun 2019 09:08:32 GMT

If the partnership distributes the interest to you and your partners, then yes, you would have to include that income on your personal return. I'm assuming that the account generating the revenue would be held in the partnerships name?

Yes, the LLC account would earn interest and the interest...

klmedlin — Thu, 06 Jun 2019 09:08:34 GMT

Yes, the LLC account would earn interest and the interest would remain in the LLC account.

Doesn't matter if it's distributed or not. It's still tax...

levisncap89 — Thu, 06 Jun 2019 09:08:34 GMT

Doesn't matter if it's distributed or not. It's still taxable flowthrough in the year generated if it's taxable interest income. Partnerships don't entail entity-level taxes.

What sort of account would be generating the interest revenue?

Either a DDA or savings account at a bank.

klmedlin — Thu, 06 Jun 2019 09:08:36 GMT

Either a DDA or savings account at a bank.

Officially, I have to tell you that any interest income,...

levisncap89 — Thu, 06 Jun 2019 09:08:37 GMT

Officially, I have to tell you that any interest income, even a penny, has to be reported as taxable income. CPA boards are funny about things like that.

Realistically, DDA's pay de minimus interest rates and it's doubtful you'd receive a 1099-INT unless the cumulative balance is quite substantial. If you don't receive one, then the interest wasn't reported to IRS as income at the entity level and whether or not you report it becomes a personal decision on your part.

Thank you! I appreciate your help.

klmedlin — Thu, 06 Jun 2019 09:08:39 GMT

Thank you! I appreciate your help.

No problem :-)

levisncap89 — Thu, 06 Jun 2019 09:08:40 GMT

No problem 🙂

Answered in comments

levisncap89 — Thu, 06 Jun 2019 09:08:41 GMT

Answered in comments