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I established a Self Directed IRA LLC in Pennsylvania in…

I established a Self...

I established a Self Directed IRA LLC in Pennsylvania in 2015 for the purpose of holding real estate and other allowable assets in my IRA. I just received a statement of non filed periods for CNIT and CPSK. for 2015 and 2016...I am not sure what I need to do

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

This is a single member LLC

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Answered in 22 minutes by:
3/20/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,336
Experience: Taxes, Immigration, Labor Relations
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CNIT stays for corporate net income tax specifically established in PA.

CPSK stays for Pennsylvania Capital Stock Tax - also applied to corporations.

Limited liability companies that is classified as a corporation for Federal income tax purposes are also subject to CNI tax as a corporation.

Details on the Corporate Net Income Tax can be found in the Tax Compendium.

http://www.revenue.pa.gov/GeneralTaxInformation/News%20and%20Statistics/Documents/Tax%20Compendium/2017_tax_compendium.pdf

It looks as PA DOR "thinks" that your LLC is classified as a corporation...

I guess - that is based on incorrect information you provided when your LLC was registered in PA.

Please verify.

In any case - you will need to communicate to PA taxing authorities and update information they have.

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Customer reply replied 5 months ago
I have reviewed my Operating Agreement, my Certificate of Organization, and other documents which reflect that this is a single member LLC. My operating agreement states that the company shall be treated as a "disregarded entity for tax purposes, per Treasury Regulations 301.77701-2(c)(2)(i) and 1.368-2.My question now is how on earth do I get PA to recognize this.Part 2 to this question is this: Assuming PA recognizes me as a single member entity, how do I become exempt, as an LLC, from filing Schedule C or D on my personal income tax returns?Tx for you help.

As that is a Self Directed IRA LLC - it is NOT owned by you and the IRA itself is a member.

So far - NOTHING is reported on your personal tax return.

We may not relay on or reference the Operating Agreement in this case as the determination is based on the federal classification.

I assume the Certificate of Organization was issued by the PA - and that is a not a foreign entity?

Then - verify what other documents or registration the LLC made with PA authorities...

Also - when you applied for EIN - did not accidentally select corporation?

In any case - that issue must be cleared with PA DOR - regardless if they are correct or not.

Your point is that the LLC is owned by the tax exempt entity - not by you personally - and you are acting as a LLC's manager - and not as a owner.

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Customer reply replied 5 months ago
Thank you...I will contact PA DOR tomorrow and begin resolution of this. I will also double check all of my start-up papers - federal included. I will be back in touch in the next couple of days.

The issue is that somehow they start "thinking" that is a corporation.

You will need to convince them differently.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,336
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 4 months ago
Lev, I spoke with PA DOR today. They have instructed me to file 2015 RCT-101 and mark it as "final"...and to report 0 income as there was no income. This applies to both corporations and single member LLCs...Thoughts?

That sounds as "work around"

We still do not know what in their system triggered that communication...

But if they suggest that - and if there will not be any penalty - that might be a solution.

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Customer reply replied 4 months ago
I am working on the form now...I am just entering all 0s and reporting it as a first and final - at their suggestion. Although the instructions state I need to attach various balance sheets, tax returns, etc...I will not. I guess I will go at it this way and see where it goes. TY for your help.

I would do the same way - we just need to satisfy their system.

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