Not for profit LLC

[OldCarGuy]

I have been filing results from our car club organized as an LLC but we are not for profit -- our annual results are plus or minus $100 -- can I file as an non profit or some othe method ?

[Mike9241]

Filing as a nonprofit requires approval of nonprofit status by filing Form 1023 with the IRS. TurboTax does not support any non-profit forms. Here is the link for a do-it-yourself preparation and filing of Form 1023-EZ

https://www.pay.gov/public/form/start/62759871 

There are also numerous websites that can do this. Use at your own risk. Until then you may have a for profit partnership which would require filing form 1065. There is also the possibility it's operating as a hobby. As a hobby, income is taxable, but expenses are not deductible.  

see this webpage from the IRS as to hobby. 

https://www.irs.gov/pub/irs-news/fs-08-23.pdf 

[OldCarGuy]

last questions (i hope) -- why does the K1 Box 14 show "self-employment income" as box "C" 

--we lost money: $57 per partner which is correct in box 14 "A" and our capital acct is now negitive but in box "C" it shows $3210 profit, an ammount we have never made even if you add up all 10 years???

questions: 1) where does entry come from?  2) how will effect my personal tax return?

i just dont want a surprize when i start working on my return 

--sorry to belabor this 

big thanks

jim

[LaShaunA3 · Accepted solution]

Box 14 Code “C” (other self-employment income) on the K-1 isn't used to report ordinary partnership income. It should only appear in limited situations. Based off your initial disclosure of the type of business and activities, I doubt this would be the case. 

If the partnership experienced an overall loss for the year, and partners show losses in Box 1 and Box 14A, a positive amount in Box 14C could be a reporting or software error. 

If you believe the partnership has made an error on your Schedule K-1, notify the partnership. Ask for a corrected Schedule K-1. Don’t change any items on your copy of Schedule K-1. Be sure that the partnership sends a copy of the corrected Schedule K-1 to the IRS.

https://www.irs.gov/instructions/i1065sk1

[Mike9241]

Enter on line 14c the partnership's gross nonfarm income from self-employment. Individual partners need this amount to figure net earnings from self-employment under the nonfarm optional method (NFOM) on Schedule SE (Form 1040), Part II. Enter each individual partner's share in box 14 of Schedule K-1 using code C. 

it will have no effect since you hve a loss, you will not be using the NFOM 

There may be another issue because of the loss; you need to have tax basis to deduct it. If your capital account is negative, this may indicate you don't have tax basis. However, liabilities, if any, may be allocable to the partners and treated as additional basis

https://www.irs.gov/instructions/i1065sk1#en_US_2025_publink1000127745 

[OldCarGuy]

 -- since I am the one creating the K1 in TT Business -- did I enter something incorrectly?

[dmertz]

Seems more like a desire to be a 503(c)(7) social club which requires an approved application on Form 1024 to be treated as tax exempt.  Until approved, the club can't be treated as tax exempt.