Discussion:Single-Member LLC owned by S corp
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Discussion Forum Index --> Advanced Tax Questions --> Single-Member LLC owned by S corp
Discussion Forum Index --> Tax Questions --> Single-Member LLC owned by S corp
| 10 April 2009 | |
| I just want to make sure I have this right. I have an S Corp client who just started an LLC where the S Corp is the only member. Does this mean that when it comes to tax time next year, I just consolidate the LLC & S Corp figures and file on the single 1120S return? Is there a different form I file just the LLC's information on? I know if it was an individual it would go on the Schedule C, but I can't find anything like that for the Corp.
If the 2 companies are consolidated for the tax return, how will IRS know that the LLC has actually filed a return? Sorry if this sounds like a dumb question, I've never encountered anything like this before. Thanks for any help. | |
| 10 April 2009 | |
| That is correct. You are completing what is called a consolidated return, where one pass-through entity completely owns the other. For simplicity sake, I use QuickBooks, create one company file for both, but also create classes for each company, so I can run a Profit and Loss by class to see both components but also the totals combined. | |
| 24 April 2009 | |
| Cape053, since smllc's income goes on the 1040 shc c of the single-member [individual] owner, similarly in the case of s-corp being the owner of that llc, all the income of that llc flows through to the s-corp that reports the consolidated income for both. no need for irs to know whether that llc exists or how it earned its income. | |
Harry Boscoe (talk|edits) said: | 24 April 2009 |
| Not correcting, but clarifying, I would say that the income and expenses of the SMLLC would be "reported on" the S corporation tax return, rather than saying they "flow through to" it. And IIRC, the assets and liabilities of the LLC would be treated as assets and liabilities of the S corporation, too. | |
| 24 April 2009 | |
| The existence of the LLC may create some filing requirements and tax liabilities for state purposes despite the fact that it is a disregarded entity. For example, in California the LLC would be required to file Form 568 and pay the $800 minimum tax and LLC fee, just as an SMLLC owned by an individual would do. | |
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