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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22830
Experience:  Taxes, Immigration, Labor Relations
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I am not clear on how to file. both companies are llc with

Resolved Question:

I am not clear on how to file. both companies are llc with different ownership. One Llc is the parent of the other. do both companies
file a 1065? How do I show that one owns the other? which return do I show the income?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Lev :

Hi and welcome to our site!
A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations.
Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation.

Customer:

I understand the structure of an LLC. My question is when one LLC is the parent of another and each have different

Lev :

Assuming you have LLC A which owns LLC B.
In this case we need to start with LLC B. If LLC B has only one member - it is a disregarded entity and doesn't file any tax return - and all income is treated as received by LLC A.
If however LLC B has several members - it is a partnership and filed form 1065 - and should issue K1 for each partner.

Customer:

How do I show that company a owns company b? There are different partners in each llc.

Customer:

Neither are disregarded entities.

Lev :

LLC B should issue schedule K1 to each partner - so each co-owner will receive K1.
Because LLC A is a member of LLC B - it will receive K1 as well - that is how the ownership is reported.

Lev :

Assuming LLC A is a partnership - it will file its own 1065 and will include K1 received from LLC B.

Customer:

llc a is not partner of llc b

Lev :

What are relations between LLC A and LLC B?

Customer:

LLC a is the parent company of LLC b. Each of different partners.

Lev :

Who are members of LLC B?
Is LLC A a member of LLC B?

Customer:

There are individual member in each of the LLC's.

Customer:

LLc a is not a member of LLC b nor is LLC b a member of LLC a.

Lev :

So far - there is NO relations between these LLC A and LLC B. In this case why do you call one LLC a parent?

Customer:

For one to be considered the parent--they must have ownership correct?? and if it is not a member then there is no

Customer:

relation

Lev :

yes - that is correct. When one business entity owns another business entity - that usually means parent-child relation between these entities. If there is no ownership - generally - there is no such relations unless you meant something different.

Lev :

If there is no ownership relation - each LLC (which is treated as a partnership files its own 1065 and issues K1 to respective members.

Lev :

Please clarify what exactly you meant when mentioned that one LLC is the parent of the other?
If there is no ownership - what is the reason of calling one LLC a parent?

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22830
Experience: Taxes, Immigration, Labor Relations
Lev and 8 other Tax Specialists are ready to help you

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