If your Gross Income was less than $58,000 you are qualified for Free Federal Tax Filing

File your Federal Taxes for Free with TurboTax Federal FREE Edition

Go Back   Tax Forum - Payroll, Accounting and Tax Help Forum > Individual Tax Forums > Business Income Tax Forum

Sponsored Links

Post New Thread  Reply
 
Thread Tools Display Modes

Sponsored Links

Old 09-14-2012, 02:17 AM   #1
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
single member LLC to a multi member LLC

Registered users do not see advertisement
First 2 years is a single member LLC filed a Schedule C.

Single member llc will go ahead and amend the by-laws...

Question..

the multi member llc will now file a partnership return... is there anything else they would need to file to let the IRS know they are a Multi-member and not a single member anymore.. ??

thanks
1040_Vin is offline   Reply With Quote
Sponsored Links

Old 09-14-2012, 06:33 AM   #2
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
“the multi member llc will now file a partnership return... is there anything else they would need to file to let the IRS know they are a Multi-member and not a single member anymore.. ??”----> The IRS issued a ruling dealing with the conversion of a SMLLC to aMMLLC and vice versa. While the results of the ruling is not surprising, the ruling is important because they indicate that the IRS is continuing to take a practical approach to LLCs and because they clarify the tax results of some transactions that will become increasingly common as the use of LLCs expands.
In Revenue Ruling 99-5, the IRS ruled that if an existing member of a SMLLC sells part of his or her interest to another person and then continues to participate in the operation of the business as part of a MMLLC, the transaction will be treated as a taxable sale by the existing member of an undivided interest in all of the assets of the LLC to the new member followed by a nontaxable contribution by both members of their interests in the assets to a new entity taxed as a partnership. If, on the other hand, the new member purchases an interest in the existing SMLLC from the LLC itself, the transaction will be treated as a nontaxable contribution by the existing member of the assets of the SMLLC to a new entity, MMLLC, taxed as a partnership and a nontaxable contribution by the new member of the purchase price to the new entity. They'll need to get a new EIN for the MMLLC since they'd be going from a Sole Prop, SMLLC, to the Partnership. MMLLC, along with the two returns. One 1040 with Sch C/SE for the period as a SMLLC, then one for the period as a partnership, MMLLC, with a 1065, Sch K-1 of 1065, Sch SE and 1040.
Juno is offline   Reply With Quote
Old 09-15-2012, 02:36 PM   #3
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
“the multi member llc will now file a partnership return... is there anything else they would need to file to let the IRS know they are a Multi-member and not a single member anymore.. ??”----> The IRS issued a ruling dealing with the conversion of a SMLLC to aMMLLC and vice versa. While the results of the ruling is not surprising, the ruling is important because they indicate that the IRS is continuing to take a practical approach to LLCs and because they clarify the tax results of some transactions that will become increasingly common as the use of LLCs expands.
In Revenue Ruling 99-5, the IRS ruled that if an existing member of a SMLLC sells part of his or her interest to another person and then continues to participate in the operation of the business as part of a MMLLC, the transaction will be treated as a taxable sale by the existing member of an undivided interest in all of the assets of the LLC to the new member followed by a nontaxable contribution by both members of their interests in the assets to a new entity taxed as a partnership. If, on the other hand, the new member purchases an interest in the existing SMLLC from the LLC itself, the transaction will be treated as a nontaxable contribution by the existing member of the assets of the SMLLC to a new entity, MMLLC, taxed as a partnership and a nontaxable contribution by the new member of the purchase price to the new entity. They'll need to get a new EIN for the MMLLC since they'd be going from a Sole Prop, SMLLC, to the Partnership. MMLLC, along with the two returns. One 1040 with Sch C/SE for the period as a SMLLC, then one for the period as a partnership, MMLLC, with a 1065, Sch K-1 of 1065, Sch SE and 1040.

The SMLLC is a silent entity under a parent company. Everything like the bank statements, payroll, etc.. was reported under the silent entity and the '09 & '10 showed the revenue & expenses under the parent companies name. For 09 & 10 the SMLLC showed 0 revenue & 0 expenses on the Schedule C, all it did was state that the revenue and expenses were being reported under the parent company. For 2012 two of the partners in the parent company was bought out by a new partner. But now the managing partner wants to close out the parent company and just use the silent entity showing all the revenue and expenses on the new MMLLC. Because in the end there was no point to even have a parent company set up. Is there anyway in keeping the EIN of the SMLLC by changing the SMLLC to the MMLLC? The managing partner doesn't want to do that. If creating a new entity is the only way to handle this how long will it take to do? I mean they need to file a MMLLC for 2012.
1040_Vin is offline   Reply With Quote
Old 09-15-2012, 06:04 PM   #4
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
“The SMLLC is a silent entity under a parent company. Everything like the bank statements, payroll, etc.. was reported under the silent entity and the '09 & '10 showed the revenue & expenses under the parent companies name. For 09 & 10 the SMLLC showed 0 revenue & 0 expenses on the Schedule C, all it did was state that the revenue and expenses were being reported under the parent company. For 2012 two of the partners in the parent company was bought out by a new partner. But now the managing partner wants to close out the parent company and just use the silent entity showing all the revenue and expenses on the new MMLLC. Because in the end there was no point to even have a parent company set up. Is there anyway in keeping the EIN of the SMLLC by changing the SMLLC to the MMLLC?”----->I gues the EIN assigned to the SMLLC is the EIN you use. The fact that the SMLLC and now will become a MMLLC does not cause a need to apply for a new EIN. If you did, you'd be making a mistake that you would just later need to correct. If a “disregarded entity” is owned by an individual, it is treated as a sole proprietor so if this is true then..... Sole Proprietors You will be required to obtain a new EIN if any of the following statements are true. You are subject to a bankruptcy proceeding. You incorporate. You take in partners and operate as a partnership. You purchase or inherit an existing business that you operate as a sole proprietorship. By default, the tax treatment for a sole proprietorship and LLC is essentially the same, unless certain filings are made. HOWEVER, A SMLLC becoming a MMLLC is NOT a change of entity which would require applying for an EIN. Thus in your situation - there is not a need to apply for a second EIN for this entity. On page 2 of the SS-4, look at footnote #2. "However, do not apply for a new EIN if the existing entity only (a) changed its business name, (b) elected on Form 8832 to change the way it is taxed (or is covered by the default rules), (c)......" - you can read it - does not apply here. In your situation - you are covered under the default rules. Also read page 4 on the SS-4 instructions under "disregarded entities". So then I called the SS-4 dept (IRS) and asked them to confirm my line of thinking and conclusion - they said I was correct - that unless the SMLLC was changing their name - when a SMLLC converts to a MMLLC - UNDER THE DEFAULT RULES - then no new EIN is required.
“The managing partner doesn't want to do that. If creating a new entity is the only way to handle this how long will it take to do? I mean they need to file a MMLLC for 2012.”------>It varies sate to state ;for example, The California Secretary of State can be very slow when it comes to approving new business entities. Once you file the entity, you can sit around tapping your fingers for as long as two months. However, The California Secretary of State offers "rush filing" options for forming business entities. The first is a 24 hour rush that ads $500 to the filing process, an expense that should really only be undertaken if you are desperate. The second option runs a whopping $15 and has a turn around time of 7 to 10 business days. LLC's vary by state, they can just modify the certificate of organization and add his name. He will have to sign the certificate of Organization with his name on it. Anything he is bringing on to the company should be included and anything they've put in should be included.As far as taxes go, it depends on how they are going to be paid. I guess so;they neeed to file 1065 for 2012. A SMLLC can be either a corporation or a single member “disregarded entity”. Again, to be treated under federal law as a corporation, the SMLLC has to file Form 8832 /2553and elect to be classified as a corporation. Whether or not they should convert their SMLLC to a MMLLC, and how their new MMLLC should be treated for tax purposes, is a challenging decision involving several critical factors. Before making a change, they need to be sure to do some research and consult with a tax professional who is well versed in the issues of choice of entity.
Juno is offline   Reply With Quote
Old 09-16-2012, 04:35 PM   #5
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
“The SMLLC is a silent entity under a parent company. Everything like the bank statements, payroll, etc.. was reported under the silent entity and the '09 & '10 showed the revenue & expenses under the parent companies name. For 09 & 10 the SMLLC showed 0 revenue & 0 expenses on the Schedule C, all it did was state that the revenue and expenses were being reported under the parent company. For 2012 two of the partners in the parent company was bought out by a new partner. But now the managing partner wants to close out the parent company and just use the silent entity showing all the revenue and expenses on the new MMLLC. Because in the end there was no point to even have a parent company set up. Is there anyway in keeping the EIN of the SMLLC by changing the SMLLC to the MMLLC?”----->I gues the EIN assigned to the SMLLC is the EIN you use. The fact that the SMLLC and now will become a MMLLC does not cause a need to apply for a new EIN. If you did, you'd be making a mistake that you would just later need to correct. If a “disregarded entity” is owned by an individual, it is treated as a sole proprietor so if this is true then..... Sole Proprietors You will be required to obtain a new EIN if any of the following statements are true. You are subject to a bankruptcy proceeding. You incorporate. You take in partners and operate as a partnership. You purchase or inherit an existing business that you operate as a sole proprietorship. By default, the tax treatment for a sole proprietorship and LLC is essentially the same, unless certain filings are made. HOWEVER, A SMLLC becoming a MMLLC is NOT a change of entity which would require applying for an EIN. Thus in your situation - there is not a need to apply for a second EIN for this entity. On page 2 of the SS-4, look at footnote #2. "However, do not apply for a new EIN if the existing entity only (a) changed its business name, (b) elected on Form 8832 to change the way it is taxed (or is covered by the default rules), (c)......" - you can read it - does not apply here. In your situation - you are covered under the default rules. Also read page 4 on the SS-4 instructions under "disregarded entities". So then I called the SS-4 dept (IRS) and asked them to confirm my line of thinking and conclusion - they said I was correct - that unless the SMLLC was changing their name - when a SMLLC converts to a MMLLC - UNDER THE DEFAULT RULES - then no new EIN is required.
“The managing partner doesn't want to do that. If creating a new entity is the only way to handle this how long will it take to do? I mean they need to file a MMLLC for 2012.”------>It varies sate to state ;for example, The California Secretary of State can be very slow when it comes to approving new business entities. Once you file the entity, you can sit around tapping your fingers for as long as two months. However, The California Secretary of State offers "rush filing" options for forming business entities. The first is a 24 hour rush that ads $500 to the filing process, an expense that should really only be undertaken if you are desperate. The second option runs a whopping $15 and has a turn around time of 7 to 10 business days. LLC's vary by state, they can just modify the certificate of organization and add his name. He will have to sign the certificate of Organization with his name on it. Anything he is bringing on to the company should be included and anything they've put in should be included.As far as taxes go, it depends on how they are going to be paid. I guess so;they neeed to file 1065 for 2012. A SMLLC can be either a corporation or a single member “disregarded entity”. Again, to be treated under federal law as a corporation, the SMLLC has to file Form 8832 /2553and elect to be classified as a corporation. Whether or not they should convert their SMLLC to a MMLLC, and how their new MMLLC should be treated for tax purposes, is a challenging decision involving several critical factors. Before making a change, they need to be sure to do some research and consult with a tax professional who is well versed in the issues of choice of entity.
Thanks Juno... Can I back up a bit... one of the members of the holding company (A) says the SMLLC (B) is owned by himself (which means filing a Schedule C). But after reading over a LLC Agreement of (B); that agreement says that comapny (A) is the member. How can I confirm who the actual member is? Will the Assigned EIN Letter from the IRS confirm to me who the true member is of company B? If company A the holding company is the sole member of company B which return do I use to file company B? I don't think you would file a tax return then... because company A is the holding company of company B and company A is the sole member of company B (so everything would be rolled up to A; sort of like a consolidated return). Is that correct theory? If so how to tell the IRS that Company B which has a EIN and all the bank statements and payroll information are reported under company B; that B is a silent entity under A? For example if the IRS sent a notice to B for back payroll taxes how to let the IRS know that B is the silent entity and everything is reported under A? Thank You
1040_Vin is offline   Reply With Quote
Old 09-17-2012, 01:58 AM   #6
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
“one of the members of the holding company (A) says the SMLLC (B) is owned by himself (which means filing a Schedule C). But after reading over a LLC Agreement of (B); that agreement says that comapny (A) is the member. “----->Basically, the purpose of a holding company is to own shares of other companies and control of a number of different companies.Even if A is a member of the SMLLC, B,( whether or not A is a managing member or non-managing members).the SMLLC would continue to operate indpendent and would continue file payroll, sales/use, unemployement taxes at the LLC level.
“ How can I confirm who the actual member is? Will the Assigned EIN Letter from the IRS confirm to me who the true member is of company B?”-----> I guess so. A member is the owner of the LLC, B. Think of them like shareholders in a corporation. Court rules that LLC owner personally liable for payroll taxes/SE taxes or estimated taxes. Because LLC members pay taxes directly to the IRS on their share of the profits, the LLC does not make withholdings or pay employment taxes like an employer. As of January 1, 2009, the SMLLC will be responsible for collecting, reporting and paying over employment tax and excise tax obligations using the name and EIN assigned to the SMLLC.
“ If company A the holding company is the sole member of company B which return do I use to file company B? I don't think you would file a tax return then... because company A is the holding company of company B and company A is the sole member of company B (so everything would be rolled up to A; sort of like a consolidated return). Is that correct theory? “---->As described above, it depends; a holding company is a company that doesn’t have any operations, activities, or other active business. Instead, it owns assets of an LLC. Even if a holding company allows independent function of a subsidiary, it can still require financial benchmarks, including sales figures and net profits, for the subsidiary LLC, B; even if A is a member of the SMLLC, B, the SMLLC would continue to operate indpendent and would continue file payroll, sales/use, unemployement taxes at the LLC level. In general, a subsidiary company operating under the control of a holding company can file its own federal tax return( provided no other corporation in the holding company's control group files a consolidated tax return with the parent organization). The IRS requires the signatures of representatives from a holding company's subsidiary businesses on an apportionment plan to make the agreement legal. The subsidiaries have to fill out Form 1122 to indicate their permission to be included in the consolidated return. Until all subsidiary company(ies) agree to the apportionment plan, a holding company can't legally file federal taxes for subsidiaries as controlled groups or consolidated groups. Subsidiaries can legally file separate taxes as independent organizations until all parties reach an agreement. If the the business reaches an agreement in the middle of a tax year, the holding company can file taxes using the IRS's controlled group rules for the amount of time the agreement is in place.
“If so how to tell the IRS that Company B which has a EIN and all the bank statements and payroll information are reported under company B; that B is a silent entity under A? For example if the IRS sent a notice to B for back payroll taxes how to let the IRS know that Bis the silent entity and everything is reported under A?”----->Assume that the HC, A, is an LLC, then, an LLC may function as a parent. The LLC's profits and tax burden may pass from the company to its owner or the LLC may owe taxes on profits passed to it from its holdings. In this second case, the LLC may opt to file a consolidated return. As said above, an LLC does not have an obligation to file a consolidated return; in some situations, it is advantageous to regard certain holdings as independent entities responsible for their own tax. State treatment of income tax liability often differs from the federal regulations. Most states allow consolidated returns, modeling their requirements on the federal regulations. Some will additionally require an "informational return" at the entity level. This means that LLCs and other similar entities must file a return indicating that they are passing their profits and tax responsibility to the parent entity. Even if an informational return is not required, a form indicating the subsidiary's intent to pass profits and tax responsibility to its owner is mandatory. I guess you need to contact the IRS for more info in detail.
Juno is offline   Reply With Quote
Old 09-17-2012, 03:01 PM   #7
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
“one of the members of the holding company (A) says the SMLLC (B) is owned by himself (which means filing a Schedule C). But after reading over a LLC Agreement of (B); that agreement says that comapny (A) is the member. “----->Basically, the purpose of a holding company is to own shares of other companies and control of a number of different companies.Even if A is a member of the SMLLC, B,( whether or not A is a managing member or non-managing members).the SMLLC would continue to operate indpendent and would continue file payroll, sales/use, unemployement taxes at the LLC level.
“ How can I confirm who the actual member is? Will the Assigned EIN Letter from the IRS confirm to me who the true member is of company B?”-----> I guess so. A member is the owner of the LLC, B. Think of them like shareholders in a corporation. Court rules that LLC owner personally liable for payroll taxes/SE taxes or estimated taxes. Because LLC members pay taxes directly to the IRS on their share of the profits, the LLC does not make withholdings or pay employment taxes like an employer. As of January 1, 2009, the SMLLC will be responsible for collecting, reporting and paying over employment tax and excise tax obligations using the name and EIN assigned to the SMLLC.
“ If company A the holding company is the sole member of company B which return do I use to file company B? I don't think you would file a tax return then... because company A is the holding company of company B and company A is the sole member of company B (so everything would be rolled up to A; sort of like a consolidated return). Is that correct theory? “---->As described above, it depends; a holding company is a company that doesn’t have any operations, activities, or other active business. Instead, it owns assets of an LLC. Even if a holding company allows independent function of a subsidiary, it can still require financial benchmarks, including sales figures and net profits, for the subsidiary LLC, B; even if A is a member of the SMLLC, B, the SMLLC would continue to operate indpendent and would continue file payroll, sales/use, unemployement taxes at the LLC level. In general, a subsidiary company operating under the control of a holding company can file its own federal tax return( provided no other corporation in the holding company's control group files a consolidated tax return with the parent organization). The IRS requires the signatures of representatives from a holding company's subsidiary businesses on an apportionment plan to make the agreement legal. The subsidiaries have to fill out Form 1122 to indicate their permission to be included in the consolidated return. Until all subsidiary company(ies) agree to the apportionment plan, a holding company can't legally file federal taxes for subsidiaries as controlled groups or consolidated groups. Subsidiaries can legally file separate taxes as independent organizations until all parties reach an agreement. If the the business reaches an agreement in the middle of a tax year, the holding company can file taxes using the IRS's controlled group rules for the amount of time the agreement is in place.
“If so how to tell the IRS that Company B which has a EIN and all the bank statements and payroll information are reported under company B; that B is a silent entity under A? For example if the IRS sent a notice to B for back payroll taxes how to let the IRS know that Bis the silent entity and everything is reported under A?”----->Assume that the HC, A, is an LLC, then, an LLC may function as a parent. The LLC's profits and tax burden may pass from the company to its owner or the LLC may owe taxes on profits passed to it from its holdings. In this second case, the LLC may opt to file a consolidated return. As said above, an LLC does not have an obligation to file a consolidated return; in some situations, it is advantageous to regard certain holdings as independent entities responsible for their own tax. State treatment of income tax liability often differs from the federal regulations. Most states allow consolidated returns, modeling their requirements on the federal regulations. Some will additionally require an "informational return" at the entity level. This means that LLCs and other similar entities must file a return indicating that they are passing their profits and tax responsibility to the parent entity. Even if an informational return is not required, a form indicating the subsidiary's intent to pass profits and tax responsibility to its owner is mandatory. I guess you need to contact the IRS for more info in detail.
Juno.. the IRS didn't give me any advise on this.. they said they deal with taxes not the structure of businesses.. How should the SMLLC report showing that the income and expenses are being reported on the MMLLC? What would be the best way that the IRS will accept? do you think if I just state on the schedule C that all the income and expenses are being reported on the MMLLC that that could suffice? thank you
1040_Vin is offline   Reply With Quote
Old 09-17-2012, 03:33 PM   #8
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
“the IRS didn't give me any advise on this.. they said they deal with taxes not the structure of businesses..”---->Agreeed.
“ How should the SMLLC report showing that the income and expenses are being reported on the MMLLC?”- I GUESS it depends on the situation; as described previously, you do it sort of like a consolidated corporate return. You can add the SMLLC's income/expense and report them on a combined basis. You just combine all the expense and income of the SMLCC and report as single income source and expense source for each item. OR you will use FORM 8825(ifSMLLC income/expense is from rental pty) with your 1065 for the UMBRELLA LLC to list each property income/expense separately, which are then combined for a total sum of all activity. That UMBRELLA LLC will then file as usual providing you shedule K-1.
“ What would be the best way that the IRS will accept? do you think if I just state on the schedule C that all the income and expenses are being reported on the MMLLC that that could suffice? “----> I guess you can try as described previously and you may contact the IRS to let them know it. This is all I can say.

Last edited by Juno; 09-17-2012 at 03:36 PM..
Juno is offline   Reply With Quote
Old 09-17-2012, 03:57 PM   #9
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
“the IRS didn't give me any advise on this.. they said they deal with taxes not the structure of businesses..”---->Agreeed.
“ How should the SMLLC report showing that the income and expenses are being reported on the MMLLC?”- I GUESS it depends on the situation; as described previously, you do it sort of like a consolidated corporate return. You can add the SMLLC's income/expense and report them on a combined basis. You just combine all the expense and income of the SMLCC and report as single income source and expense source for each item. OR you will use FORM 8825(ifSMLLC income/expense is from rental pty) with your 1065 for the UMBRELLA LLC to list each property income/expense separately, which are then combined for a total sum of all activity. That UMBRELLA LLC will then file as usual providing you shedule K-1.
“ What would be the best way that the IRS will accept? do you think if I just state on the schedule C that all the income and expenses are being reported on the MMLLC that that could suffice? “----> I guess you can try as described previously and you may contact the IRS to let them know it. This is all I can say.
You can add the SMLLC's income/expense and report them on a combined basis. You just combine all the expense and income of the SMLCC and report as single income source and expense source for each item -----where on the MMLLC 1065 tax return? also but the 8825 is for rental property.. this isn't rental property does that matter?? Also where to show the EIN of the SMLLC on the 1065 tax return?

Last edited by 1040_Vin; 09-17-2012 at 04:01 PM..
1040_Vin is offline   Reply With Quote
Old 09-17-2012, 03:59 PM   #10
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
Then you do nor need form 8825.
Juno is offline   Reply With Quote
Old 09-17-2012, 04:04 PM   #11
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
Then you do nor need form 8825.
So where to report then?
1040_Vin is offline   Reply With Quote
Old 09-17-2012, 04:10 PM   #12
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
you will use your 1065 to list the SMLLC's income/expense separately, which are then combined for a total sum of all activity. That MMLLC will then file as usual providing you shedule K-1.
Juno is offline   Reply With Quote
Old 09-17-2012, 04:15 PM   #13
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
you will use your 1065 to list the SMLLC's income/expense separately, which are then combined for a total sum of all activity. That MMLLC will then file as usual providing you shedule K-1.
But where on the 1065 return do I show the name of the SMLLC and the EIN?
1040_Vin is offline   Reply With Quote
Old 09-17-2012, 04:19 PM   #14
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
I guess on sch K1
Juno is offline   Reply With Quote
Old 09-17-2012, 04:42 PM   #15
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
I guess on sch K1
thanks Juno..all set
1040_Vin is offline   Reply With Quote
Old 09-17-2012, 04:48 PM   #16
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
As said previously, it depends on the situation; an LLC does not have an obligation to file a consolidated return; in some situations, it is advantageous to regard certain holdings as independent entities responsible for their own tax. The income and expenses of the SMLLC would be "reported on" the MMLLC tax return on 1065, rather than saying they "flow through to" it.
Juno is offline   Reply With Quote
Old 09-18-2012, 01:50 AM   #17
skier_j
Moderator
 
Join Date: Sep 2008
Posts: 2,283
Rep Power: 8skier_j is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by 1040_Vin View Post
thanks Juno..all set
is this a subset of your other question? seems really familiar scenario.
skier_j is offline   Reply With Quote
Old 09-18-2012, 07:45 AM   #18
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
To sum it up,
The MMLLC is the Parent of the SMLLC. The SMLLC is solely owned by the MMLLC. The MMLLC owns the SMLLC, not the other way around and they both file Form 1065. There was a case where the SMLLC sent an election to be taxed as a partnership;there is to be one 1065 filed by the MMLLC with all of the activity of the MMLLC and the SMLLC within that income tax return. They are separated simply to isolate possible liability issues" There is no separation for income tax purposes. the IRS likely will inquire for an income tax form from a SMLLC based on previously filing; so you might file a final return with the same information as used in the past.The SMLLC's only member is the MMLLC single owner/member. The Operating Agreement specifically notes the MMLLC is an LLC. Payroll taxes are usually filed independently by the SMLLC but consolidated payroll reporting is also possible. In other words, just consolidate both P & L and B/S of the SMLLC into the main MMLLC and disregard the K1 pass through aspect of the SMLLC.all of it would be consolidated for tax purposes even though you may well keep it separated for management purposes. , in regard to the consolidation, you can consolidate both the P & L as well as the B/S of the SMLLC into the MMLLC rather than just consolidate SMLLC's Balance sheet into the MMLLC balance sheet and thus not pass the SMLLC's P&L through to MMLLC as a K1 pass through. In other words, just consolidate both P & L and B/S of the SMLLC into the main MMLLC and disregard the K1 pass throughaspect of the SMLLC.
Juno is offline   Reply With Quote
Old 09-18-2012, 01:03 PM   #19
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by Juno View Post
To sum it up,
The MMLLC is the Parent of the SMLLC. The SMLLC is solely owned by the MMLLC. The MMLLC owns the SMLLC, not the other way around and they both file Form 1065. There was a case where the SMLLC sent an election to be taxed as a partnership;there is to be one 1065 filed by the MMLLC with all of the activity of the MMLLC and the SMLLC within that income tax return. They are separated simply to isolate possible liability issues" There is no separation for income tax purposes. the IRS likely will inquire for an income tax form from a SMLLC based on previously filing; so you might file a final return with the same information as used in the past.The SMLLC's only member is the MMLLC single owner/member. The Operating Agreement specifically notes the MMLLC is an LLC. Payroll taxes are usually filed independently by the SMLLC but consolidated payroll reporting is also possible. In other words, just consolidate both P & L and B/S of the SMLLC into the main MMLLC and disregard the K1 pass through aspect of the SMLLC.all of it would be consolidated for tax purposes even though you may well keep it separated for management purposes. , in regard to the consolidation, you can consolidate both the P & L as well as the B/S of the SMLLC into the MMLLC rather than just consolidate SMLLC's Balance sheet into the MMLLC balance sheet and thus not pass the SMLLC's P&L through to MMLLC as a K1 pass through. In other words, just consolidate both P & L and B/S of the SMLLC into the main MMLLC and disregard the K1 pass throughaspect of the SMLLC.
I go it, thanks Juno.... and Skier yes same scenario (thanks Skier).. I actually did it correctly they way both of you explained.. I also called the IRS and they told me the same thing... The thing that kept confusing me was that the client and his attorney he is using for some back payroll taxes kept saying the he is the sole owner of the SMLLC, but after reading the agreement between the MMLLC and the SMLLC it was obvious that the MMLLC was the sole owner of the MMLLC and not him.

thank you
1040_Vin is offline   Reply With Quote
Old 09-18-2012, 01:39 PM   #20
skier_j
Moderator
 
Join Date: Sep 2008
Posts: 2,283
Rep Power: 8skier_j is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by 1040_Vin View Post
I go it, thanks Juno.... and Skier yes same scenario (thanks Skier).. I actually did it correctly they way both of you explained.. I also called the IRS and they told me the same thing... The thing that kept confusing me was that the client and his attorney he is using for some back payroll taxes kept saying the he is the sole owner of the SMLLC, but after reading the agreement between the MMLLC and the SMLLC it was obvious that the MMLLC was the sole owner of the MMLLC and not him.

thank you
Ok, good. just a quick responses to one of the minor questions you raised...

The SS-4 FID confirmation letter will be addressed to:

XYZ, LLC
% ABC, LLC Sole Member

that will indicate only one thing, who the "responsible" party was when the FID was requested and assigned.

If there have been changes in the interim they will not be reflected accuratly using ONLY this response letter as a guide as that letter never gets reissued or changed.

You can make changes to the name or sole member in writing with the IRS and you will receive a letter acknowledging that change.

Bear in mind that a change in sole member will bring on its own set of issues such as technical terminations and the like, not something to take lightly in the event you've had operations for ANY period of time.

With each filed return, a tax matters partner is selected, it probably will be the managing member of the top tier entity filing the return, but does not have to be.

That takes care of the IRS data.

The only real way to keep track of who owns what is by looking at the orgainzations orgainzation book and the operating agreement containe therein as well as any other written documents, any amendments followed up by looking at any subsequent filings with the sect'y of state in the state organized and any written minutes to member meetings.

Most states require filings to change names. Not too many require a filing to change ownership info but some do. Most require annual filings for registered agent and officers.
skier_j is offline   Reply With Quote
Old 09-18-2012, 05:08 PM   #21
1040_Vin
Member
 
1040_Vin's Avatar
 
Join Date: Aug 2010
Posts: 84
Rep Power: 51040_Vin is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by skier_j View Post
Ok, good. just a quick responses to one of the minor questions you raised...

The SS-4 FID confirmation letter will be addressed to:

XYZ, LLC
% ABC, LLC Sole Member

that will indicate only one thing, who the "responsible" party was when the FID was requested and assigned.

If there have been changes in the interim they will not be reflected accuratly using ONLY this response letter as a guide as that letter never gets reissued or changed.

You can make changes to the name or sole member in writing with the IRS and you will receive a letter acknowledging that change.

Bear in mind that a change in sole member will bring on its own set of issues such as technical terminations and the like, not something to take lightly in the event you've had operations for ANY period of time.

With each filed return, a tax matters partner is selected, it probably will be the managing member of the top tier entity filing the return, but does not have to be.

That takes care of the IRS data.

The only real way to keep track of who owns what is by looking at the orgainzations orgainzation book and the operating agreement containe therein as well as any other written documents, any amendments followed up by looking at any subsequent filings with the sect'y of state in the state organized and any written minutes to member meetings.

Most states require filings to change names. Not too many require a filing to change ownership info but some do. Most require annual filings for registered agent and officers.
Thanks Skier , yes the IRS agent did explain I would need to send letter to the IRS stating the change of the sole member of the SMLLC, which I plan on doing sometime soon.

Thank you
1040_Vin is offline   Reply With Quote
Disclaimer
While you may find opinions of forum members useful, they don't take the place of professional legal advice. TaxForum.us suggests that you find professional legal help for all your legal questions since every situation is different and depends on your state tax laws.

The information presented on this site comes without any warranty of correctness and, therefore, should not to be relied upon as professional advice. No attorney client relationship is created through use of this site.
Post New Thread  Reply


Special Offers
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT. The time now is 08:20 PM.


Join TaxForum.us
tax calculator

Free Tax Help® Version 3.8.4
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.




Approved TurboTax Affiliate Site
TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
vRewrite 1.5 beta SEOed URLs completed by Tech Help Forum and Chalo Na.