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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2392
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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I started a business this year, an LLC, with 2 of my

Customer Question

I started a business this year, an LLC, with 2 of my sisters. I have invested $2,000 of my own dollars into it. Do I get to write this off? Is there special forms to fill out on my personal taxes for this?
Submitted: 1 year ago.
Category: Tax
Expert:  Anne replied 1 year ago.

Hi

I'm Anne I've been preparing taxes for 27 years and I'll be happy to help you.

The question of whether or not you may write off the whole $2000 depends on a couple of things.

First, I'm assuming that you and your sisters have set up this business as a Partnership (Form 1065). If this is true, then if you don't work for the Partnership (meaning you were JUST an investor), AND the Partnership itself lost money this year, then you MAY qualify to take the full $2000.

I say MAY because again, I don't know if you are actually working in this business or if you are just an investor....also I don't know if only 1 of your sisters is working for the business, and the other sister is also just an investor.

You should receive a K1 from whoever prepares the Partnership tax return that you will include in your personal tax return.

If you have any questions, please post them here and I'll be notified

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Customer: replied 1 year ago.
The 3 of us invested, and the three of us are all working partners, but we haven't paid ourselves anything yet, we've only put in our time and invested our money. Does that help you give a clearer answer?
Expert:  Anne replied 1 year ago.

Yes, thank you

Since you are all 3 working the business, then whatever profits or losses the partnership incurs is split between the 3 of you depending on the % of ownership as set forth in the Partnership agreement. (Although equal ownership between the 3 of you is the most common method I see, it's also not uncommon to split the partnership ownership via investment $)

You may choose to take "owner's equity" as payment , assuming the Partnership has the money . You will want to talk to whoever is preparing the Partnership return.

If you do not recoup your investment in the first year , then it is carried over to future years, so you don't lose it.

I hope this helps.

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