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Old 06-15-2015, 10:33 PM
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Cool final return for 2-partner inactive LLC

Partners had an LLC with no activity, i.e. no income and no expenses treated as deductions. Partners dissolved the LLC. Given that LLC had no income and no expenses treated as deductions in a federal tax return, should a final form 1065 return still be filed? IRS stats form 1065 must be filed unless there is no income and no expenses. Does that apply to final return?

I appreciate your responses.



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Old 06-16-2015, 03:26 AM
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Originally Posted by ftax View Post
Partners had an LLC with no activity, i.e. no income and no expenses treated as deductions. Partners dissolved the LLC. Given that LLC had no income and no expenses treated as deductions in a federal tax return, should a final form 1065 return still be filed? IRS stats form 1065 must be filed unless there is no income and no expenses. Does that apply to final return?
No .In general, you do not need to file form 1065 as you had no income / expenses for a given tax year. But the problem you may run into is that the IRS does not know that you had no income nor expenses and may be looking for a return, down the road. So, it may be better to simply file the form 1065 and report no income and no expenses with all zero.OR Your MMLLC treated as a PS since the LLC had no income AND no expenses for the tax year, then you are not required to file a Form 1065 with the IRS. If you have filed a Form 1065 before but do not file due to this situation this year, you will probably receive an inquiry from the IRS asking if you need to file 1065. You can then reply to this notice and state that you had no income and expenses and were not required to file 1065. However, as you dissolve your MMLLC , then, you will need to file a final Form 1065 so that the IRS stops looking for 1065 from you any longer.



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Old 06-16-2015, 10:44 PM
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Originally Posted by Wnhough View Post
If you have filed a Form 1065 before but do not file due to this situation this year, you will probably receive an inquiry from the IRS asking if you need to file 1065. You can then reply to this notice and state that you had no income and expenses and were not required to file 1065. However, as you dissolve your MMLLC , then, you will need to file a final Form 1065 so that the IRS stops looking for 1065 from you any longer.
Does that help the partners did not file an initial return either as the business was started and dissolved in the same year. The business has an EIN. BTW, they took care of state franchise taxes (zero income) etc. in order to be dissolved. If no action taken, would that cause any headache later on?



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Old 06-17-2015, 01:43 AM
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[quote=ftax;26443]QUOTE]

Does that help the partners did not file an initial return either as the business was started and dissolved in the same year. The business has an EIN. BTW, they took care of state franchise taxes (zero income) etc. in order to be dissolved. ================>> The LLC itself does not pay federal income taxes, but, some states impose an annual tax on LLCs even if assets and income are 0 ,i.e., California’s $800 minimum annual franchise tax. So in general, your LLC needs to pay franchise tax to the state each fiscal year even if the LLC doesn’t do biz/ operates at a loss. However,there is about a dozen states that do not impose any annual reporting requirements /and associated fees/ or any annual LLC franchise taxes.

If no action taken, would that cause any headache later on?============>>I do not think so. Taking care of state franchise taxes (zero income) etc. in order to be dissolved has nothing to do with filing final return for the LLC; as said, in principle, the LLC that you designate as a partnership for tax purposes must provide the IRS with an informational tax return on Form 1065 and a Sch K-1 attachment for each LLC member. This filing requirement remains effective for any tax year the LLC has no business activity or income. When you prepare the return, you can simply enter zeroes for revenue and expenses. BUT If you didn't elect to be taxed as a S- or C corp you don't need to do anything at the Federal level. It may be different with the state. As said, most states treat LLCs as corps and require either a corp or special LLC return every year, often along with minimum state franchise fees. When your newly formed LLC elects to dissolve , the process is far simpler and the LLC does not need to pay the annual Franchise Tax if certain requirements are met in some states. A newly formed LLC can file a Certificate of Cancellation Short Form and the Franchise Tax will be waived if the Certificate of Cancellation is being filed within 12 months from the date the Articles of Organization of the LLC were filed with the Secretary of State; if a final annual tax return has been or will be filed with the Franchise Tax Board.You may file a final tax return for your LLC. You don’t have to wait until the end of the year. You can file for a “short” year. Simply file the standard LLC income tax forms and check the box on the form telling the IRS that this is the final return. since you no longer plan to operate your llc, you should be filing a final tax return (there is a 'final return' box you must check).



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