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Old 06-09-2011, 10:48 AM
Junior Member
Join Date: Jun 2011
Posts: 1
LLC K1 Help!

Wow! You guys are a wealth of information.

Here’s my question:

I built a commercial building in 2008. Started LLC with 6 members. Terrible timing!!! Lost money with no tenants for the last 3 years. Saw that I could elect to be treated as C corp, so held off filing (the 1120′s that I thought I could do), while I have been scrambling to avoid bankruptcy.

A few months ago I filed all years worth of 1120′s and the election form 8823. Woops! The IRS just sent me a letter saying can’t do the corporate election and I need to refile all years as 1065′s.

This creates a nightmare $30k worth of penalties for 6 (members) * 12 (months) * $195 (or $89 for other years) for not sending k1′s on time (that I didn’t think I needed to send…… Not to mention 6 people have to go back and do 4 years worth of amendments!

Do you have any thoughts? If the are only losses on the K1′s are they obliged to amend or can they ignore?

Can I escape this mess?

Thank you!

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Old 06-10-2011, 10:53 AM
Join Date: Oct 2010
Posts: 5,233
I guess you still need to file your late MHLLC tax returns. Once you own your LLC, then even if its income is $0 or even less than $0.You need to carry your LLC tax records It's best for each year for business purposes. For example, suppose you had operating expenses, meaning you had a loss, but you had no income from your business.Then you can carry over loss from previous years. As long as you didn't elect to be taxed as S- corp or a C –corp, you don't need to file your federal level tax return.But you still must file your MMLLC returns with your state government; I guess many states usually treat LLCs as either S-corps or C -corps and require either a corporate or special LLC return each year, and charges LLCs in the state minimum state franchise fees. A penalty is assessed against the partnership if it is required to file a partnership return and it fails to file the return by the due date, including extensions or files a return that fails to show all the information required, unless there is a proper reason. For each failure to furnish Schedule K-1 to a partner when due and each failure to include on Schedule K-1 all the information required to be shown , then you are subject to a $100 penalty imposed with respect to each Schedule K-1 for which a failure occurs.
Can I escape this mess?====> NO; you still need to file your late tax returns of the MMLLC

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