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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3839
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I formed an LLC (2 member LLC - myself and my wife , partnership

Resolved Question:

I formed an LLC (2 member LLC - myself and my wife , partnership based) in California this year.
I don't have any activity yet, except deposited an initial amount in a brokerage account under the LLC.
Do I still need to file a partnership tax return for Federal and State this year?
Submitted: 9 months ago.
Category: Tax
Expert:  Lane replied 9 months ago.

Lane :

Hi, please don't shoot the messenger here, but because you are a multi-member and treated as a partnership, you'll need to file

Lane :

See this:

Lane :

A LLC can be treated as a partnership for tax purposes. In such scenario, the relevant Limited Liability Companies must file a tax return on Form 1065 (i.e. U.S. Return of Partnership Income) and also provide a Schedule K-1 attachment for each LLC member

Customer:

Even though it's a "pass through" entity?

Lane :

Limited liability companies that you designate as a partnership for tax purposes must provide the IRS with an informational tax return on Form 1065 and a Schedule K-1 attachment for each LLC member. This filing requirement remains effective for any tax year the LLC has no business activity or income. When you prepare the return, you can simply enter zeroes for revenue and expenses. Unless you file Form 7004 for an automatic six-month extension of time to file, the IRS will impose an $89 -- current as of November 2010 -- per-partner penalty for each month you file the return after its due date. Schedule K-1 reports each member’s share of partnership profits and losses. The IRS will impose an additional penalty of $50 per month for each K-1 you fail to attach to the return by the due date.

Lane :

yes, if it were a single member LLC then it is considered a disregarded entity, lik a sole proprietor

Lane :

But for partnership or corporte tax elections and the multi-member takes you there , you must file

Customer:

Do I need to file both federal and state tax returns?

Lane :

Let me check CA, but I believe so ... while I'm looking here's a good piece that puts it all in perspective: http://info.legalzoom.com/need-file-tax-return-llc-activity-3621.html

Lane :

Yes, sorry, for CA too ... However, it looks like you'll qualify for what they call the reduced fling program

Lane :

Here's the information on that ffrom CA FTB

Customer:

Thanks for the links.

Customer:

For the federal returns is there an automatic extension or do I still need to apply for an extension?

Lane :

You'll need to file, form 7004 for the automatic six month extension: Here's the form:

Lane :

Woops

Customer:

OK. Thanks for all the assistance

Lane :

You're very welcome ... sorry for the news, but hopefully having all the facts will help you "see around some corners"

Customer:

That's OK. Looks like I have to spend another $300 to $400 to file my partnership tax returns next year!

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3839
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 6 other Tax Specialists are ready to help you
Expert:  Lane replied 9 months ago.

Thanks for the rating.

If you'd like to work with ME again, you can either add me as a preferred expert on your home page, say “For Lane only,” at the beginning of another question OR simply come back to this thread to ask an additional question.

Either way, I enjoyed working with you.

Thanks again,

Lane

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