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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I am trying to File My Taxes for my LLC I an trying to figure

Resolved Question:

I am trying to File My Taxes for my LLC I an trying to figure out if I need to file form 8893. I have the H&R Block tax prep software. which I will never use agian because it is to difficult. Turbo Tax is much better. There is 2 partners. Me (80%) and Him (20%) How do we need to file? and Also Do I need to do this as a Disregarded Entity?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

Hi and welcome to Just Answer!

 

An LLC with several members (multiple investors) is generally considered as partnership.

The partnership is no disregarded entity, but it is a pass through entity - it is files its own tax return - but do not pay income taxes.

You do not need to file from 8893.

 

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

 

All business income and expenses are reported on the partnership tax return form 1065 - http://www.irs.gov/pub/irs-pdf/f1065.pdf

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

 

Let me know if any clarification needed.

Customer: replied 2 years ago.

Here is the Question:

 

For the Tax year for which you ar Filing, Will the partnership file form 8893, Election of Partnership Level Tax Treatment, or an election statement under section 6231(a)(1)(B)(ii) for partnership-level tax treatment?

 

Yes or No

 

Customer: replied 2 years ago.

Also what is a Section 754 election

Expert:  Lev replied 2 years ago.

For the Tax year for which you are Filing, Will the partnership file form 8893, Election of Partnership Level Tax Treatment, or an election statement under section 6231(a)(1)(B)(ii) for partnership-level tax treatment?

You do not need to fir form 8893 - that is very special treatment.

The answer is No.

 

Also what is a Section 754 election.

See IRS publication 559 - www.irs.gov/pub/irs-pdf/p559.pdf

The death of a partner closes the partnership's tax year for that partner. Generally, it does not close the partnership's tax year for the remaining partners. The decedent's distributive share of partnership items must be figured as if the partnership's tax year ended on the date the partner died. To avoid an interim closing of the partnership books, the partners can agree to estimate the decedent's distributive share by prorating the amounts the partner would have included for the entire partnership tax year.

On the decedent's final return, include the decedent's distributive share of partnership items for the following periods.

  1. The partnership's tax year that ended within or with the decedent's final tax year (the year ending on the date of death).

  2. The period, if any, from the end of the partnership's tax year in (1) to the decedent's date of death.

The partnership can make an IRC section 754 election to equalize a new partner's outside and inside basis. See this article and examples - http://www.nysscpa.org/cpajournal/2005/205/essentials/p50.htm

 

Customer: replied 2 years ago.
no body died. Still alive and in business
Expert:  Lev replied 2 years ago.

So why you are asking about Section 754 election?

Just do not worry about that - at least for now...

Customer: replied 2 years ago.
the software asked if we held a 754 election
Expert:  Lev replied 2 years ago.
So say No.
Customer: replied 2 years ago.
Would the profits handed out to the owners every month need to be on a 1099
Expert:  Lev replied 2 years ago.
No - it will be reported on K-1's
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22619
Experience: Taxes, Immigration, Labor Relations
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