Oregon LLC, schedule C and partnership penalties Hi,
My wife and I formed an Oregon LLC in Oregon just days before we moved from California to Oregon. we technically were California residents on the date of incorporation of the LLC. For the last four years, we have reported all our LLC income and expenses on our schedule C. Most years we split the revenue and expenses and reported two schedule C's.
I now come to find out that since Oregon is not a community property state our LLC is considered a partnership and we should have filed partnership tax returns and issued K1's to each other.
Our LLC has had minimal revenue and expenses. Profits amount to less that $2000 in its best year so far.
The IRS has never questioned our returns so far:
1) Do we need to file amended returns and issue past K1's for these past four years?
2) Are we liable for the thousands of dollars of penalties for late filing of form 1065 for all these years? If so, how can we get out of this? It would amount to far more than the income or assets of our LLC.
3) Separate question: Can I file for an extension to file our 1065 for this year and if I don't eventually file one (I need some tax advice), does this raise a flag to the IRS?
thanks! |