crvUOCQFur3RjjacfA8pyY

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Contributor

09/25/09 10:06am PDT
Viewed by asker 02/05/10 10:00am PST

Multi LLCs owned by Single Member LLC

Lacerte : 2008

Client actively invests & manages 4 businesses. Each business is a separate LLC (each files a 1065) with multiple members (A, B, C & D LLCs) The client is also the sole owner of a management LLC (“M LLC”) that owns his share of the other 4 LLCs.

A, B, C, D LLC partner K-1 forms lists M LLC as the owner. LLC M files as a Schedule C as a disregarded entity. Does A, B, C & D income get reported directly on schedule E?

If so, there will be much income on schedule E and none on schedule C. But I’ll have a Schedule C with expenses & no income. (even though the expenses are directly related to managing the other LLCs)

Can the income of the other K-1s get reported on the Schedule C? (Either way, All income is SE income)

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6 Replies

Amy-in-PA

Allstar, Accountant Community AllStar

09/25/09 10:25am PDT

I know nothing about LLC's but I suspect that if "Management Company M" which is "really" a Schedule C (in my mind, the mind of a person who doesn't understand LLC's), gets K-1's from someplace or other, the K-1's land in income on Schedule C. Where else would they land?

Effectively, HOW, I think you wrote that the PERSON doesn't get any K-1's, the person's "M" company which "takes the place of" a Schedule C and flows right thru to Sch C, gets the K-1's. That same "M" company that "is really in Amy's mind" a Schedule C, pays expenses, right?

Where does Schedule E ever come into it? Just make believe the K-1's, were 1099's that came to a "real person" who had a "normal" Schedule C. If you're afraid IRS won't understand, write them a "statement note" telling them what you did, and why.

Back up before it's too late. For a professional answer, call Tech Support at 1-800-933-9999 (Lacerte)(other numbers ProSeries, QB, or TurboTax). I am a volunteer, not compensated or supported by Intuit.

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sjrcpa

Accountant Community AllStar

09/25/09 11:27am PDT

Best Answer - Chosen by the Community

Unless an election to the contrary has been made, a single member LLC is disregarded for income tax purposes. Therefore, the K-1s issued to the SMLLC get reported on Schedule E.

Maybe the Schedule C "expenses" are really investment expenses? Maybe you have a Sch C with zero income and expenses?

In the future, perhaps A,B,C & D should pay M a management fee.

The more I know, the more I don't know.

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HowCPA

Contributor

09/25/09 12:06pm PDT

Thanks sjrcp. Since M LLC is a member of A LLC. I think any management fee would have to be in the form of a Guaranteed Payment on the K-1 which would also wind up on Sch E?

Also the K-1 tax ID is that of M LLC not the individual, so I wanted the IRS to be able to trace it.

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clmakin

Contributor

09/25/09 1:11pm PDT

First, the K-1's will get reported on Schedule E. Second, the expenses should be reported as UPE on Schedue E, as well, not on schedule C. Third, attach a statement to the return that states that K-1 xxx with ein xxx was reported on the return because ..... That way they can still trace it through, all the income and expenses are properly paired up and everything is hunky dorey.

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sjrcpa

Accountant Community AllStar

09/25/09 1:22pm PDT

I would do what clmakin suggests for 2008 since K-1s have already been issued.

The more I know, the more I don't know.

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PhoebeRoberts

Accountant Community AllStar

09/26/09 4:51pm PDT