Single Member LLC

[tonia2021]

Taxpayer has been schedule C business for several years. July 2009 filed the paperwork to become a single member LLC and received a new EIN.

Do I simply prepare 2 separate schedule C for 2009? Taxpayer kept track of all income and expenses separate for two different entities. As far as assets...depreciate part year on Schedule C (#1) and part of the year on Schedule C (#2)?

Thanks for any advise.

[ChEAr$]

Taxpayer has been schedule C business for several years. July 2009 filed the paperwork to become a single member LLC and received a new EIN.

Do I simply prepare 2 separate schedule C for 2009? Taxpayer kept track of all income and expenses separate for two different entities. As far as assets...depreciate part year on Schedule C (#1) and part of the year on Schedule C (#2)?

Thanks for any advise.

As for the assets, were they formally transferred into the LLC? Was a bill of sale
prepared whereby the LLC bought assets from the owner? If not, all depreciation is
allocable to the person who owns them.

[tonia2021]

A bill of sale was not prepared. The taxpayer was a sole proprietor and now is a single member LLC.

[RitaB]

That's what I'd do

Taxpayer has been schedule C business for several years. July 2009 filed the paperwork to become a single member LLC and received a new EIN.

Do I simply prepare 2 separate schedule C for 2009? Taxpayer kept track of all income and expenses separate for two different entities. As far as assets...depreciate part year on Schedule C (#1) and part of the year on Schedule C (#2)?

Thanks for any advise.

That's what I would do, Tonia, if this were a TN taxpayer, because of the TN Franchise and Excise Tax for the LLC. Also, if he had another EIN before the LLC was created (which is how it sounded to me), I'd separate the info.

I would just split the current year depreciation based on time in service.

I think IRS would be happy with one Sch C, cause LLC's are state creatures really. IRS has other fish to fry, I think.

(To be honest, I think the taxpayer should have bought a good liability policy instead of joining the LLC bandwagon if he's concerned about liability protection, but that's not the question.)

[Gretel]

Mostly, I agree with the others.

If no state issues, it's just one business. IRS doesn't care about LLC status for disregarded entities. I only would put last EIN on Sch. C.

If assets are not legally transferred into LLC there will be no liability protection for them, one of the reasons LLC's are created.

In our litigious society I always would recommend liability insurance plus LLC.