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 Lane Your Own Question
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10491
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now
A new question is answered every 9 seconds

Hi, I incorporated a side business Id been running at home,

This answer was rated:

Hi, I incorporated a side business I'd been running at home, a business that has accrued an amount of losses I've yet to be able to claim due to insufficient income. So, when I fiel next year, I will include information on the company (an LLC). My question is, can I show a payment from the LLC to the side company to "buy" the losses, so I can use them to offset income? This would "zero out" the side business and I would not have to file another return featuring it.

NPVAdvisor :

Hi,

Customer:

Hi

NPVAdvisor :

Le me make sure I understand ... YOU have both a C-Corp and an LLC? ... or is the LLC the one you're referring to (with the side business being a sole proprietorship possibly?)

Customer:

Not even a "C" corp- the side business had an EIN but I showed its losses on the schedule C

Customer:

i am now going to get serious so i formed an LLC

NPVAdvisor :

Ah, ok that one was a sole proprietorship then

Customer:

i will have revenues

Customer:

yes sole proprietor

Customer:

i don't want to lose the losses i accrued

Customer:

since this is a continuation of that business

Customer:

so i want to write a check from the LLC's account to my personal account in the amount of the losses

NPVAdvisor :

OK both single member LLCs and sole proprietorships are considered disregarded entities (both income an loss (FOR both) flow from the schedule C to line 12 on your 1040 (business nincome or loss)

Customer:

saying it's for intellectual property or some such

Customer:

so they are automatically aggregated?

NPVAdvisor :

There's really no need to do that as it is you that had the net operating loss all along

Customer:

ok so next year when i include the LLC and it's new EIN

NPVAdvisor :

yes, nothing really changed TAX WISE when you formed the LLC (not in terms of its effect on you) you just now have that liability protection

Customer:

i can carry forward the losses from the sole proprietorship and show them

Customer:

right thanks i hear you loud and clear

Customer:

it's just that there's that line on the form about carrying forward losses

Customer:

and i didn't want the IRS to freak out and say "there are no losses from last year for the EIN

Customer:

so what you're saying it it's all really just based on my social security number

NPVAdvisor :

Since this is a personal net operating loss, you'll do ot on form 1045

NPVAdvisor :

the net effect is ... thats right

NPVAdvisor :

for two disregarded entites

Customer:

ok thanks

Customer:

enjoy the holiday

NPVAdvisor :

YW

NPVAdvisor :

f this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

NPVAdvisor :

You toop!

NPVAdvisor :

(too)

NPVAdvisor :

:)

Lane and 2 other Tax Specialists are ready to help you


Thanks Clayton

Lane