How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lev Your Own Question

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22615
Experience:  Taxes, Immigration, Labor Relations
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

A company is an llc with two members. They use two trucks

Resolved Question:

A company is an llc with two members. They use two trucks in the business. Should they sell the trucks which they individually own to the llc and then depreciate the trucks costs in the llc. Do most llcs file as a partnership. They are a small business
Submitted: 4 years ago.
Category: Tax
Expert:  Lev replied 4 years ago.

Yes - LLC with several members is generally considered as partnership.

A partnership is the relationship existing between two or more persons who join to carry on a trade or business.

Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.

Some additional information about partnerships may be found in IRS Publication 541 - http://www.irs.gov/publications/p541/index.html

 

The LLC may choose to be treated as S-corporation. You may read more about different business structures here - http://www.irs.gov/businesses/small/article/0,,id=200274,00.html

 

Members should not "sell" trucks to the LLC. If trucks are used for business - they are depreciated. If trucks are used partially for business and partially for personal purposes - the basis for depreciation should be prorated.

 

You may find more details in IRS Publication 946, How To Depreciate Property - http://www.irs.gov/pub/irs-pdf/p946.pdf

 

Let me know if you need any help.

 

Customer: replied 4 years ago.

The trucks are owned by the individuals, but used in the partnership(llc) for business purposes. Are the trucks depreciated on the individuals returns or on the partnership return? And on what form? Another question, can the partnership purchase and own a truck itself.

Expert:  Lev replied 4 years ago.

All business income and expenses are reported on the partnership tax return.

Partnership should issue schedules K-1 to each partner reporting net taxable income - http://www.irs.gov/pub/irs-pdf/f1065sk1.pdf

 

Depreciation is reported on the form 1065 line 16 - http://www.irs.gov/pub/irs-pdf/f1065.pdf

and calculated on the form 4562 - http://www.irs.gov/pub/irs-pdf/f4562.pdf - that form should be attached to the partnership tax return.

 

Yes - partnership may purchase and may own business properties - a truck or any other property. You may register the truck on the LLC name.

However - I suggest to consult with your insurance company if that will affect your insurance cost.

 

 

Customer: replied 4 years ago.
One last question and then I will pay extra. The trucks are owned by the individuals as individuals, but you say they can depreciated them on the partnership return even though the partnership doesn't own them. Thanks and I will pay. Ron
Expert:  Lev replied 4 years ago.

Yes - that is correct.

Each partner contributes money, property, labor or skill into a partnership - in your situations trucks are contributed into partnership - there is no need to change legal ownership or registration.

 

Income from partnership would be generally self-employment income and will be reported on the schedule C by partners - so generally if a specific property is used by that partner only - he/she may report depreciation on individual tax return - but that would be much simpler to report all expenses on the partnership tax return.

 

Let me know if you need any help and sorry for not able to respond promptly.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22615
Experience: Taxes, Immigration, Labor Relations
Lev and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.