Claiming expenses under an LLC in partnership?

Question

I am a 50% partner in an LLC.
When we file for taxes - I would like to find out if the passthrough expenses from the LLC on my tax return can be an amount which is different than that appears on my partners tax return?

Answer 1

Hello, Vandana! It is definitely possible that although you are apparently a 50% OWNER (referring to capital), there are different percentages pertaining to allocation of profit/loss. Allocation of profit/loss will automatically be according to ownership percentages UNLESS the partnership agreement states otherwise.

For example, a person could buy into a partnership at 50% ownership, but with the agreement that he only gets 10% of the yearly profits. Even though he receives only 10% of the profits year by year, he would still get his 50% of the partnership assets if the partnership were later disbanded.

I hope that helps; you should be able to check your partnership agreement to see if there are special allocations. The Form 1065 instructions explain a bit more in the link below. Good luck! :-)

Answer 2

You should check the agreement (if there is any) as to how income and expenses are to be split. If you and your partner agreed that everything should be split 50/50% in the LLC then your income and expenses should be exactly the same on the K-1 that you would receive from the partnership. The only thing that might be different would be if either of you put money into or borrowed money out of the partnership. That is called "draw" and could be different for both of you. But you could have expenses on your own that are for the partnership, and that could be totally different from your partners tax return. Those would be deducted on your personal income tax return, without passing through the partnership.

Answer 3

Look at the partnership's tax return (Form 1065). On page 3 you will see Schedule K, which reports all of the pass-through items. 50% of these items should have been reported to both you and your partner on each of your K-1s. Just do the math. If 1/2 of the amounts on the partnership's Schedule K equal the amounts on your K-1, then both you and your partner have the same amounts reported.

Answer 4

The LLC files a form 1065 to show it's profit or loss and it files K1 to show IRS who the partners are and what % of profit or loss is theirs. The LLC sends each partner a K1 showing their portion of profit or loss, but you could have more or less than 50% of the profit or loss on your K1.
The info from K1 goes on Schedule E page 2 then transfers to form 1040 line 17

Answer 5

In a sole proprietorship there is one proprietor and that they no longer purely danger the agency' sources in addition they danger their own sources by using fact they are in result one and an identical. In a partnership you have an identical element danger sensible as a sole proprietorship with the only distinction being that there is extra desirable than one proprietor. In an LLC, the owner of the agency purely hazards the agency sources and their own sources exterior the agency are no longer at risk. as a effect the agency would properly be perspectives as cut loose the vendors who purely handle the agency. In a company the agency is punctiliously cut loose the vendors who purely danger what they have invested in the agency. the main difficulty-loose style at the instant for human beings to undertake is llc by using ability for tax purposes and the risk-free practices afforded to the vendors own sources.

Answer 6

Not really. You should receive a federal (and state if applicable) Form K-1 which you will use to complete your individual income tax return.

Some of the items pass through separately like interest income and section 179 expense.

Unless there are significant other unusual activites occurring, the K-1 should be all you need to file your individual income tax return.

Answer 7

You can claim unreimbursed expenses, items that you pay for that are not reimbursed by the LLC. These can be mileage, postage, telephone costs etc. You put these on a 2106, employee business expense and carry it to the schedule E, Partnership. These expenses also increase your basis in the business. The K-1 has to be equal if you are 50% partners.

Answer 8

Not if you're a 50% partner!