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I created an LLC in 2014 with a friend. We elected to treat…

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I created an LLC...

I created an LLC in 2014 with a friend. We elected to treat the llc as Schedule C income. We did not produce any income so we each had a small loss to report. We did not file a form 1065. Are we subject to a penalty for failure to file a 1065?

Submitted: 5 months ago.Category: Tax
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Answered in 9 minutes by:
12/18/2017
Tax Professional: Barbara, Enrolled Agent replied 5 months ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,011
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

You cannot elect to treat the LLC as Schedule C income. An LLC with two members automatically defaults to a partnership.

An LLC that is taxed as a partnership is subject to the same federal income tax return filing requirements as any other partnership. The LLC must file an informational partnership tax return on tax form 1065 unless it did not receive any income during the year AND did not have any expenses that it will claim as deductions or credits.

An LLC with no business activity that is taxed as a partnership is not required to file a partnership tax return unless there are expenses or credits that the LLC wants to claim.

Penalty for failure to file partnership return is $195 per partner per month for up to 12 months for each tax year.

My best advice would be to file Form 1065 and each of you file amended returns to exclude Schedule C and include the information from the K-1 generated for each of you by the partnership return.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Tax Professional: Barbara, Enrolled Agent replied 5 months ago

Just following up with you to see if you have any other questions. If so, please let me know so I can continue to assist you.

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