LLC paid guaranteed payments to one partner prior to actually opening for business. Should this be reported as guaranteed payments or as startup costs on the tax return? Bottom line should be the same since the total startup costs are less than $10,000, just unsure about how to report it.
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It does not matter. TTB, page 8-18 says:
Thus, the simple act of claiming the start up costs as guaranteed payments is enough. No statement is required, and no special notation on the tax return that the guaranteed payments are start-up expenses is required. You simply deduct the start-up costs in the same way that you would deduct them if they were not start-up costs.How to make the election. A taxpayer chooses to currently deduct
the start-up or organizational costs by claiming the deduction
on the income tax return for the taxable year in which the
business begins. The return must be filed by the due date, including
extensions. No statement is required for taking a current deduction.
Anything over the $10,000 would have to be reported separately on a start-up expense worksheet and amortized accordingly.
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