LLC Tax returns

I started my LLC back in 2007, but am now just purchasing my first property with financing and title through the LLC. Should I have been filing tax returns for the LLC for 2007/2008, even though I had neither a profit nor a loss for the LLC for those 2 years (meaning no business was done in the LLC in those 2 years).

My loan officer wants to see my LLC tax returns for those two years, and I don’t have any!

I did file a schedule C last year (2008) on my personal returns showing some deductions for the company (cell phone bills, postage costs, etc) which resulted in a net loss for my biz on Schedule C. don’t know if that makes any difference…

What form did you file with the IRS to determine your taxation?

Shoot, its been so long that I don’t even remember! I know we didn’t file as a sole proprietership or as a corporation, I think we filed as a partnership- does that sound right at all?

If you have more than 1 member, you file as a partnership. I don’t believe a partnership is required to file if it has no income or expenses in a given year. However, an LLC has an annual fee to the state in order to be valid along with a resident agent fee.

So if we don’t have any income (which we didn’t) and we don’t have any expenses attributed to the LLC (which we didn’t, we just deducted our expenses on our personal returns) then we shouldn’t have to file? If I’m interpreting that correctly, that would line up with the research I did this evening on the IRS website. Hopefully the LO won’t have a problem with that…

I do know my LLC is current and up to date as far as the state filing goes, so I got that going for me…

If your LLC is current, then you were paying the annual fee, which means it had expenses and should have filed a return. You had start up expenses in 2007 to establish it. You just tell the LO it had no business and wasn’t required to file and see what he says.

If you had expenses you deducted on your personal return, then the partnership should have filed a return. those are partnership expenses. you must separate yourself from the partnership.

an exception may be if the partnership existed in a community property state and husband/wife were the only two partners. then you can just include it on your 1040.

I generally recommend filing a zero return (along with a note to IRS so it won’t be considered “frivolous”) to establish an operating partnership that just happened to have no income. this avoids circumstances like yours.

thanks mcwagner, sometime you don’t know what you don’t know! fortunately my LO didn’t have a problem with the fact that I didn’t have any returns to show him!