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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16559
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I started a business in 2012 under a LLC which I incorporated.

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I started a business in 2012 under a LLC which I incorporated. I made a $18000 loss on the business that year. I have another job on which I about $70000 in the same year. When I filed my tax in 2013, I did not mention anything about the loss I sustained from my LLC business because I did not want to show any reduction on my AGI because I wanted to refinance my mortgage and I did know whant to show an income lower than the $70k on my W2 to help boost my refinicing opportunity.

I made a $6000 loss on the LLC business in 2013. Can I write off both the 2012 and 2013 loss (total of about $25k) from my 2013 income from W2 when I'm doing my tax next year? If so what forms do I need to file in addition to my 1040 and what line item on my 1040 will I show the loss.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com

Megan C :

How are you today?

Megan C :

Unfortunately, you can only deduct losses in the year that they were sustained.

Megan C :

So, you cannot deduction your 2012 loss in 2013.

Megan C :

However, you can amend your tax return for 2012 to show the loss, and take the benefit of a reduced income in that year.

Megan C :

You can write off the $6,000 loss in 2013.

Megan C :

I'm sorry if you expected otherwise.

Customer:

Do I need to file other forms in addition to my 1040 and if so what forms. Other than registering the company and paying federal and state payroll taxes, I have not filed any report to IRS. Do I need to file any report on the LLC finantial results or I only need to show the net result on my 1040.

Megan C :

You will show the income and expenses on your 1040 on schedule C

Customer:

I thought there was a form that one needs to file to elect to report the LCC either as a corp or not. I than I have hard something like that before.

Megan C :

No, that's if you want to be treated as a corporation. There's nothing to file if you do not want to be taxed like a corporation. I would not recommend filing as a corporation because you would not be able to use losses to offset your incoem.

Megan C :

income*

Customer:

So I only need to file that if I want to be treated as a corp. I do not need to do anything except show the result on my Sch C if I do not need to be taxed as a corp. Right?

Megan C :

That is correct. The LLC is ignored for tax purposes if no election is made.

Megan C :

It's considered a "disregarded entity"

Customer:

What if the LLC is owned by more than 1 person

Megan C :

Then, it's a partnership which is also disregarded. You would file form 1065 and from that a K-1 would be generated, which would flow through to your personal income tax return as well.

Customer:

Is there a way I can select who answers my tax question when next I contact Just Answers?

Megan C :

If you would like to request me again, I can give you my personal link

Customer:

Ok that'll be fine.

Megan C :

http://www.justanswer.com/finance/expert-myvirtualcpa/

Megan C :

You can ask your question by entering it below my picture.

Customer:

Ok thanks,

Megan C :

You're welcome. Is there anything else I can assist you with tonight?

Customer:

I think that should be all. I hope my business grows then I'll need more help in future.

Megan C :

I hope your business grows as well!

Customer:

Bye

Megan C :

If you would, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

Megan C :

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Thanks, Ess for your positive rating. Please come back and visit me any time you have a tax, finance, or social security question that needs answered. It was a pleasure working with you today.
Customer: replied 3 years ago.

Thank you. You have really saved me a lot of time I would have spent researching the information you gave me today. Excellent response.

Anytime, if you need anything else you have my link. Just come back and use that link. Also, in a couple of days you may receive a short survey your positive feedback on that survey would be greatly appreciated.

Thanks!

Instructor Cook