Llp

[Kurly]

Mornin:

Niece called me this AM. Seems she and a friend, both speech therapists started a business together. Her friends brother (an attorney) set them up as a LLP. Here is the hook: he told them that they would each get there own clients (income) pay their own expenses. Report on their respective tax returns nameing the LLP as their business entity name. They have no EIN # in the name of the LLP only a state #.

Wouldn't they file a separate Schedule C income in their own name? and SS #?

Iff filing as an LLP file a Form 1065, reporting all income and expenses on the 1065 then prorate the net, etc, on K-1s from the LLP? Useing applied for EIN # and then hustle to apply for one with the IRS.

thanks for listening to my rambling

Kurly

[Bees Knees]

I would say since they formed an LLP under state law, they need to file Form 1065 as a partnership. Form 1065 instructions on page 2 says:

A limited liability partnership (LLP) is formed
under a state limited liability partnership law.

How can they not be a partnership if the entity itself is formed under state law as that of a partnership?

Another point is that a disregarded entity for federal tax purposes is a single member entity, such as a single member LLC. I do not believe there are any state laws that allow single member LLPs. That would be a contradiction. Even so, an LLP is an entity under state law. And since it is not a single member business, it is also then considered an entity under federal law. As such, an entity with two or more owners must either file as a partnership, or elect to be taxed as a corporation. I think the LLP status takes away any possibility of filing two separate Schedule Cs.

[ChEAr$]

Agree with Bees

LLP, like an LLC, files 1065.

this of course does not mean that profits have to be split 50/50. As in any partnership,
a formula may be used to allocate profits. So in this case, the entity would consist of
two different "departments", each essentially a separate business. Sort of like a
husband and wife "proprietorship which on a joint return may be filed with two schedule c's
and attendant se's.