Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

A multi-member partnership (LLC) made expense allocations to…

Customer Question
A multi-member partnership (LLC) made...
A multi-member partnership (LLC) made expense allocations to two of its c-corp subsidiaries. Thus, there are three legal entities with their own set of books. For example, the parent incurred $1500 in marketing expenses. The parent allocated $500 to each of the two C-corps and left $500 on its books. I understand that each entity needs to file its own tax return because the LLC did not elect to be taxed like a C-corp. Do I need to adjust the books for the expense allocations from the parent to the subsidiaries so that each legal entity is only reporting its actual expenses for the tax returns? So back to the example, do I need to reverse the $500 on the two C-corp books so that they have a marketing expense of ZERO and the parent has the full $1500 as an expense for tax purposes. I hope that make sense.
Submitted: 4 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 8 minutes by:
3/10/2018
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 4 months ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,180
Experience: Former IRS Revenue Agent
Verified

I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

Ask Your Own Tax Question
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 4 months ago

Dear Customer,

Yes, they need to be reversed. The expenses need to be each entity's own expenses.

Or you can have the actual money change hand between the companies. Expenses cannot be a book transfer only, in your described situation. It is suggested that inter company fund transfer needs to be established. The actual money needs to be transferred even for reimbursement of the other company's expenses paid for us or on our behalf.

Regards,

Fiona

Ask Your Own Tax Question
Customer reply replied 4 months ago
Great but what if each company sets up a payable or receivable from one entity to another for the expenses? Is this an option for the book transfer of expenses?
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 4 months ago

Dear Customer,

Payable and receivable are fine as long as the expenses is only deducted once in one of the companies. Also, actual money needs to change hand and not just book entries.

Regards,

Fiona

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Dr. Fiona Chen Your Own Question
Dr. Fiona Chen
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,180
1,180 Satisfied Customers
Experience: Former IRS Revenue Agent

Dr. Fiona Chen is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
I have a c-corp that owns an LLC (the corp is the single
I have a c-corp that owns an LLC (the corp is the single member of the LLC) Thus the LLC is a 'disregarded entity'. So all the income and expenses of the LLC fall through and are reported every year o… read more
abci168
abci168
Principal
27 satisfied customers
Miss Wilson. I hope you are having a Question, I have a
Hello Miss Wilson. I hope you are having a good day. Question, I have a potential client that currently has 4 single member LLCs owned by 1 multi-member LLC. They originally wanted to do a consolidate… read more
Bryan M.
Bryan M.
Owner
Masters of Accountancy
159 satisfied customers
Single member LLC owned by a Multi-Member LLC. How to report
Single member LLC owned by a Multi-Member LLC. How to report the single member LLC income?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
A LLC partnership has two capital accounts for its partners.
A LLC partnership has two capital accounts for its partners. A partner was bought out and now the single partner will be full owner of this LLC. The LLC that was once a partnership will now be a disre… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
What is the difference between an S Corp being 100% owner of
What is the difference between an S Corp being 100% owner of an LLC and having a 100% owned QSub? In either case, the LLC or the Qsub consolidates its books with the S Corp on the S Corp's tax return,… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My business partner and I are forming 5 companies. We will
My business partner and I are forming 5 companies. We will be 50/50 owners of four of them and own 66% of the 5th (the remainder will be owned my another individual). All companies will be based in Wy… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,450 satisfied customers
Is this free? Are they us attorneys / cpa? I know assistance
i know assistance with s-corps owning other s-corps and llcs. and i need information in regards ***** ***** corp owning other s corps and llcs in florida and in georgia … read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
286 satisfied customers
Start up costs: What kind of expenses can a restaurant LLC
Barbara; start up costs: What kind of expenses can a restaurant LLC (filing as a partnership) that has not had any revenue in the current year or previous years deduct currently? It would seem that re… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,450 satisfied customers
If there is a company that is already a C-Corp, can it be
If there is a company that is already a C-Corp, can it be acquired by a newly formed LLC and have the new LLC (Parent) file a Consolidated Return with the C-Corp effectively allowing the LLC to pass t… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
848 satisfied customers
I have a question about filing a return. Here is the
Hello, I have a question about filing a return. Here is the scenario: … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
When taking over the books of a company acquired through a
When taking over the books of a company acquired through a stock purchase: 1. do I need to record to the "Nominal" account balances for the period prior to the sale, 2. Is the purchaser responsible fo… read more
BK-CPA
BK-CPA
Bachelor's Degree
687 satisfied customers
Can a parent company write off the taxes that it has to pay
Can a parent company write off the taxes that it has to pay on a subsidiary company that it owns?… read more
fastfile
fastfile
Tax Advisor
Master's Degree
550 satisfied customers
How do tax laws translate? File US taxes, parent in US and
File US taxes, parent in US (earn income) and division in another country (operations, no income). No income tax return filed in other country b/c no income earned in division. In this case, do we fol… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
For S Corp- income earned from US & Canada. File taxes in US
For S Corp- income earned from US & Canada. File taxes in US as S corp. Servicing center in PH & main headquarters in US. Can we maybe defer taxes on income by putting income on PH books instead of US… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I established an llc, subsidiary format bylaws adopted (single
I established an llc, subsidiary format bylaws adopted (single member elected as disregarded entity option with irs) in wyoming last year with the Parent being a partnership firm in India. The llc bei… read more
taxmanrog
taxmanrog
Master\u0027s Degree
996 satisfied customers
What legal form should a Colombian business people select for
What legal form should a Colombian business people select for their American subsidiary?Tax-wise information.… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
S Corp is acquiring an existing company in another state. S
S Corp is acquiring an existing company in another state. S Corp desires to keep the existing company name intact so that the appearance of going concern is maintained. The question is: 1. Can the S C… read more
MequonCPA
MequonCPA
CPA Firm Owner
Master's Degree
2,165 satisfied customers
Ok I have an nyc llc taxed as s corp with $550K in net income
Ok I have an nyc llc taxed as s corp with $550K in net income this year. we own many websites and monetize them. My accountant suggested I open a Nevada C-Corp and transfer assets and extra cash for s… read more
Mark D
Mark D
Enrolled Agent
Master's Degree
1,338 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x