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A tax payer formed an LLC in the state of Texas. Can the tax…

a tax payer formed an...
a tax payer formed an LLC in the state of Texas. Can the tax payer file a schedule C for the federal tax return and retain the LLC status in the state of texas
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Answered in 1 hour by:
5/18/2017
Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 287
Experience: Director
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I am a little confused on your question. By default an LLC is a partnership / sole proprietorship; it can be a treated as a corporation is an election is made. Regards, ***** ***** income is reported has no bearing on the status of the LLC in Texas.

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Customer reply replied 11 months ago
here's why I asked the question,
I thought that the IRS did recognize LLC's as a taxable unit. Therefore a tax payer must elect to file as either a, sole proprietorship, partnership, or corporation.
The tax payer formed the LLC in Texas, When he filed the 2016 1040, he filed a schedule C on the return for the business.
So, here are my questions:
Does he need to file a partnership or corporate return and amend his 1040 return? Or can he just file a franchise tax return with the state with the same data that is in the schedule C

For the Franchise tax he can use the same data on Schedule C. However, in the future, I would recommend the LLC report as a partnership and issue a K-1; Schedule C filers are more likely to be audited.

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Customer reply replied 11 months ago
That's my question. Are you saying that he can file the LLC on his 1040 on a schedule C or a 1065 and the only downfall will be likelihood of being audited?
He has already filed a 2016 1040 and included the LLC business on a schedule C. Are telling me he can file a Texas Franchise tax return for 2016 based on the schedule C. So how does he file a Texas Franchise tax return:

A schedule C is more likely yo be audited by the IRS; just a comment.

...

For Texas, use the Schedule C to file the Franchise Tax report.

Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 287
Experience: Director
Verified
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