Filing for Partnership LLC.

tz1949

Let's say that I have an LLC called Company A where I fully control. Company A is a partner of Company B, where A controls ~20% of B. B earns 3000 USD during the tax year.

GeorgeM

Hello tz1949:

Because it appears to be a partnership, Company B, unless it has elected to be taxed as an S Corp or a C Corp, will prepare a partnership tax return, Form 1065, as well as Schedule K-1s for the partners and any limited partners. Presumably, the managing partner of Company B will be the one responsible for preparing Form 1065 and issuing the Schedule K-1s to the partners.

Because Company A is a partner in the partnership, Company B will issue a Schedule K-1 to Company A, and the Schedule K-1 will include, among other things, Company A’s allocable share of Company B’s ordinary income and/or loss, interest income, dividends, gains, credits, etc.

If Company A is a single member limited liability company, meaning it has just one owner (owners of LLCs are referred to as members) then Company A will report its Schedule K-1 income/loss in Part II of Schedule E, Supplemental Income and Loss.

While our software does support reporting income/loss from a Schedule K-1, provided the partnership is not a publicly traded entity, our software cannot create a Schedule K-1, and neither does it support Form 1065. If you need to prepare Form 1065, and Schedule K-1s for the partners, you will have to use another tax preparation service.