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Land Titled to LLC, But Note Still In Individual's Social Security Number
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mammondee
Apr 7, 2013, 6:16:42 PM4/7/13
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Client quick claim deeded 160 acres to his LLC in December of 2012. The note for this land remains in his personal name and social security number, therefore the 1098 comes in his personal name and social security number.
The LLC was formed in September with the only members being the client and his wife. The LLC is being taxed as a partnership. In 2012 the only income in the LLC is about $3,000 from share-cropping as the client worked full time elsewhere.
What do I do with the $20,000 of interest from this 1098?
The client and his wife will farm the land themselves full time in 2013. (no share-cropping and no other job).
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The LLC was formed in September with the only members being the client and his wife. The LLC is being taxed as a partnership. In 2012 the only income in the LLC is about $3,000 from share-cropping as the client worked full time elsewhere.
What do I do with the $20,000 of interest from this 1098?
The client and his wife will farm the land themselves full time in 2013. (no share-cropping and no other job).
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
remove ps
Apr 8, 2013, 4:39:39 PM4/8/13
to
mammondee wrote:
> Client quick claim deeded 160 acres to his LLC in December of 2012.
> The note for this land remains in his personal name and social
> security number, therefore the 1098 comes in his personal name and
> social security number.
>
> The LLC was formed in September with the only members being the
> client and his wife. The LLC is being taxed as a partnership. In
> 2012 the only income in the LLC is about $3,000 from share-cropping
> as the client worked full time elsewhere.
>
> What do I do with the $20,000 of interest from this 1098?
>
> The client and his wife will farm the land themselves full time in
> 2013. (no share-cropping and no other job).
If the land is all business, the 1098 of 20k mortgage interest is a
> Client quick claim deeded 160 acres to his LLC in December of 2012.
> The note for this land remains in his personal name and social
> security number, therefore the 1098 comes in his personal name and
> social security number.
>
> The LLC was formed in September with the only members being the
> client and his wife. The LLC is being taxed as a partnership. In
> 2012 the only income in the LLC is about $3,000 from share-cropping
> as the client worked full time elsewhere.
>
> What do I do with the $20,000 of interest from this 1098?
>
> The client and his wife will farm the land themselves full time in
> 2013. (no share-cropping and no other job).
business expense. There was 3k of income. Thus a 17k loss in all.
There would be other expenses like propoperty tax. Anywyay, this
amount gets reported on Schedule C (if this is a single person LLC), or
on form 1065 and then on your 1040 Schedule E page 2 (if this is a
multi person LLC, which is the case here). You can use it to balance
out your W-2 and other types of income. If it turns out your AGI is
negative, then you have a net operating loss (NOL) and you can apply
the business loss to previous years or future years (2 year back, 20
years forward). This kind of means that you file an amended return for
2 years back and claim the loss on that year's tax return, though NOLs
can get complicated.
mammondee
May 9, 2013, 12:36:36 PM5/9/13
to
On Monday, April 8, 2013 3:39:39 PM UTC-5, remove ps wrote:
> mammondee wrote:
>
>
>
> > Client quick claim deeded 160 acres to his LLC in December of 2012.
>
> > The note for this land remains in his personal name and social
>
> > security number, therefore the 1098 comes in his personal name and
>
> > social security number.
My real question is how do I avoid IRS computer matching problems with the 1098 INT being submitted in the taxpayer's personal social security number. I wanted to deduct the interest on the LLC return, but the mortgage and interest is in the taxpayer's personal name.
> mammondee wrote:
>
>
>
> > Client quick claim deeded 160 acres to his LLC in December of 2012.
>
> > The note for this land remains in his personal name and social
>
> > security number, therefore the 1098 comes in his personal name and
>
> > social security number.
Message has been deleted
mammondee
May 16, 2013, 10:00:20 AM5/16/13
to
On Monday, May 13, 2013 8:30:36 PM UTC-5, D. Stussy wrote:
>
> On WHAT LLC return? A husband/wife joint venture need not file a
>
> partnership return. It goes on a pair of Schedule C's attached to a joint
>
> 1040. That eliminates your 1098 mismatch problem.
>
>
>
> (cf. The Small Business and Work Opportunity Tax Act of 2007.)
>
> http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business
>
> http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses
>
> ... And plenty of other "Google hits" (about 164,000).
This business is being operated through an LLC and not a husband/wife co-owners. The owners want the liability protection offered by the LLC form of business. Quoted from your references:
"A business owned and operated by the spouses through a limited liability company does not qualify for the election. Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election."
>
> On WHAT LLC return? A husband/wife joint venture need not file a
>
> partnership return. It goes on a pair of Schedule C's attached to a joint
>
> 1040. That eliminates your 1098 mismatch problem.
>
>
>
> (cf. The Small Business and Work Opportunity Tax Act of 2007.)
>
> http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business
>
> http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses
>
> ... And plenty of other "Google hits" (about 164,000).
This business is being operated through an LLC and not a husband/wife co-owners. The owners want the liability protection offered by the LLC form of business. Quoted from your references:
"A business owned and operated by the spouses through a limited liability company does not qualify for the election. Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election."
Message has been deleted
dietric...@gmail.com
Mar 21, 2014, 6:35:44 PM3/21/14
to
========================================= MODERATOR'S COMMENT:
In future messages, please trim the text including our own boiler
plate
Message has been deleted
Stuart A. Bronstein
Mar 24, 2014, 11:22:55 AM3/24/14
to
"D. Stussy" <spam+ne...@bde-arc.ampr.org> wrote:
> mammondee wrote:
>> Client quick claim deeded 160 acres to his LLC in December of
>> 2012. The note for this land remains in his personal name and
>> social security number, therefore the 1098 comes in his
>> personal name and social security number.
>>
>> The LLC was formed in September with the only members being the
>> client and his wife. The LLC is being taxed as a partnership.
>> In 2012 the only income in the LLC is about $3,000 from
>> share-cropping as the client worked full time elsewhere.
>>
>> What do I do with the $20,000 of interest from this 1098?
>>
>> The client and his wife will farm the land themselves full time
>> in 2013. (no share-cropping and no other job).
>
> Husband/wife joint ventures belong on form 1040, and the LLC
> mammondee wrote:
>> Client quick claim deeded 160 acres to his LLC in December of
>> 2012. The note for this land remains in his personal name and
>> social security number, therefore the 1098 comes in his
>> personal name and social security number.
>>
>> The LLC was formed in September with the only members being the
>> client and his wife. The LLC is being taxed as a partnership.
>> In 2012 the only income in the LLC is about $3,000 from
>> share-cropping as the client worked full time elsewhere.
>>
>> What do I do with the $20,000 of interest from this 1098?
>>
>> The client and his wife will farm the land themselves full time
>> in 2013. (no share-cropping and no other job).
>
> doesn't matter (it is disregarded for tax purposes), so it ends
> up on Schedule A. Therefore, what is the issue?
So they lose that interest deduction (and least for now)? Sounds
like they should have gotten better tax advice before setting up
the LLC in the first place.
--
Stu
http://DownToEarthLawyer.com
John Levine
Mar 24, 2014, 12:00:03 PM3/24/14
to
>>> What do I do with the $20,000 of interest from this 1098?
>>>
>>> The client and his wife will farm the land themselves full time
>>> in 2013. (no share-cropping and no other job).
>>
>> Husband/wife joint ventures belong on form 1040, and the LLC
>> doesn't matter (it is disregarded for tax purposes), so it ends
>> up on Schedule A. Therefore, what is the issue?
>
>So they lose that interest deduction (and least for now)? Sounds
>like they should have gotten better tax advice before setting up
>the LLC in the first place.
Since they're working the land as a farm, wouldn't they use Schedule
>>>
>>> The client and his wife will farm the land themselves full time
>>> in 2013. (no share-cropping and no other job).
>>
>> Husband/wife joint ventures belong on form 1040, and the LLC
>> doesn't matter (it is disregarded for tax purposes), so it ends
>> up on Schedule A. Therefore, what is the issue?
>
>So they lose that interest deduction (and least for now)? Sounds
>like they should have gotten better tax advice before setting up
>the LLC in the first place.
F? Farm mortgage interest goes on line 21a.
--
Regards,
John Levine, jo...@iecc.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. http://jl.ly
Message has been deleted
John Levine
Mar 24, 2014, 5:33:51 PM3/24/14
to
>>>> The client and his wife will farm the land themselves full time
>>>> in 2013. (no share-cropping and no other job). ...
>Since they're working the land as a farm, wouldn't they use Schedule
>F? Farm mortgage interest goes on line 21a.
>To address the missing post: If they were to take it on Schedule A, how are
>they losing a deduction? The amount itself is greater than the standard
>deduction for any category....
>
>Now, as for Schedule F treatment, in this capacity, wouldn't this be a
>passive activity where they DO lose current use of the deduction...?
You can credit passive expenses against passive income, so I'd think
they could at least credit against the sharecropping income. There's
also a special $25,000 allowance to deduct passive losses from real
estate. I have no idea whether sharecropping counts as real estate,
farming, neither, or both.
Message has been deleted
mammondee
Mar 26, 2014, 10:32:41 PM3/26/14
to
On Tuesday, March 25, 2014 12:18:09 AM UTC-5, D. Stussy wrote:
> "John Levine" wrote in message news:lgq8ba$10u4$1...@miucha.iecc.com...
As far as this being a disregarded entity, as D Stussy suggests, I respectfully disagree. If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities.
> "John Levine" wrote in message news:lgq8ba$10u4$1...@miucha.iecc.com...
>
> >>>> The client and his wife will farm the land themselves full time
>
> >>>> in 2013. (no share-cropping and no other job). ...
>
>
>
I am the original poster, and I still have my original question of the 1099 int is issued in the individual's SS# and not the Partnership's EIN. I wonder about the matching issue with the IRS. Should I nominee 1099INT the interest from the individual to the partnership??
> >>>> The client and his wife will farm the land themselves full time
>
> >>>> in 2013. (no share-cropping and no other job). ...
>
>
>
As far as this being a disregarded entity, as D Stussy suggests, I respectfully disagree. If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities.
Message has been deleted
mammondee
Mar 28, 2014, 12:31:27 AM3/28/14
to
D Stussy writes:
>
> ==============
>
> The IRS disagrees with you. Community property has nothing to do with this.
Au contraire mon frère....The IRS very much agrees with me! We have been arguing this point for almost a year now!
The following is a direct quote from the IRS website when referring to the qualified joint venture election.
" A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company)"..........."A business owned and operated by the spouses through a limited liability company does not qualify for the election:
Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election. See Rev. Proc. 2002-69, 2002-2 C.B. 831, for special rules applicable to husband and wife state law entities in community property states.
Rev. Proc. 2002-69 in summary states that a LLC wholly owned by a husband and wife can choose to be a partnership or a disregarded entity IF the property is held as community property.
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses
another IRS article reads "Note: If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities."
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Single-Member-Limited-Liability-Companies near the bottom)
>
> ==============
>
> The IRS disagrees with you. Community property has nothing to do with this.
Au contraire mon frère....The IRS very much agrees with me! We have been arguing this point for almost a year now!
The following is a direct quote from the IRS website when referring to the qualified joint venture election.
" A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company)"..........."A business owned and operated by the spouses through a limited liability company does not qualify for the election:
Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election. See Rev. Proc. 2002-69, 2002-2 C.B. 831, for special rules applicable to husband and wife state law entities in community property states.
Rev. Proc. 2002-69 in summary states that a LLC wholly owned by a husband and wife can choose to be a partnership or a disregarded entity IF the property is held as community property.
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses
another IRS article reads "Note: If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities."
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Single-Member-Limited-Liability-Companies near the bottom)
Message has been deleted
Stuart A. Bronstein
Mar 28, 2014, 6:13:56 PM3/28/14
to
"D. Stussy" <spam+ne...@bde-arc.ampr.org> wrote:
> "mammondee" wrote in message
> another IRS article reads "Note: If an LLC is owned by husband
> and wife in a non-community property state, the LLC should file
> as a partnership. LLCs owned by a husband and wife are not
> eligible to be "qualified joint ventures" (which can elect not
> be treated as partnerships) because they are state law
> entities."
>
> source:
> http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Si
> ngle-Member-Limited-Liability-Companies near the bottom)
> =================
>
> I could be wrong, but my recollection is that we were told
> something different at the IRS tax forums some years ago.
If the LLC is supposed to be a disregarded entity for federal tax
purposes, why is the IRS making a distinction between spouses who
are in business together as partners and spouses who are in
business together under the cover of an LLC that they are the only
owners of?
--
Stu
http://DownToEarthLawyer.com
> "mammondee" wrote in message
> another IRS article reads "Note: If an LLC is owned by husband
> and wife in a non-community property state, the LLC should file
> as a partnership. LLCs owned by a husband and wife are not
> eligible to be "qualified joint ventures" (which can elect not
> be treated as partnerships) because they are state law
> entities."
>
> source:
> http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Si
> ngle-Member-Limited-Liability-Companies near the bottom)
>
> I could be wrong, but my recollection is that we were told
> something different at the IRS tax forums some years ago.
If the LLC is supposed to be a disregarded entity for federal tax
purposes, why is the IRS making a distinction between spouses who
are in business together as partners and spouses who are in
business together under the cover of an LLC that they are the only
owners of?
--
Stu
http://DownToEarthLawyer.com
mammondee
Mar 29, 2014, 2:21:19 AM3/29/14
to
On Friday, March 28, 2014 5:13:56 PM UTC-5, Stuart A. Bronstein wrote:
> If the LLC is supposed to be a disregarded entity for federal tax
>
> purposes, why is the IRS making a distinction between spouses who
>
> are in business together as partners and spouses who are in
>
> business together under the cover of an LLC that they are the only
>
> owners of?
>
Good question. However it is very clear in many IRS articles, publications, and instructions this is their stand. Check out page 2 of the 1065 instructions which state:
> If the LLC is supposed to be a disregarded entity for federal tax
>
> purposes, why is the IRS making a distinction between spouses who
>
> are in business together as partners and spouses who are in
>
> business together under the cover of an LLC that they are the only
>
> owners of?
>
"A qualified joint venture conducts a trade
or business where: the only members of the
joint venture are a married couple who file a
joint return; both spouses materially
participate in the trade or business, as mere
joint ownership of property is not enough;
both spouses elect not be treated as a
partnership; and the business is co-owned
by both spouses and is not held in the name
of a state law entity such as a partnership or
limited liability company."
Of course this is unless the LLC hold community property. Then the husband and wife can choose between taxed as a partnership or a disregarded entity!
Stuart A. Bronstein
Mar 29, 2014, 1:22:57 PM3/29/14
to
mammondee <mmurr...@gmail.com> wrote:
> Stuart A. Bronstein wrote:
>
>> If the LLC is supposed to be a disregarded entity for federal
>> tax purposes, why is the IRS making a distinction between
>> spouses who are in business together as partners and spouses who
>> are in business together under the cover of an LLC that they are
>> the only owners of?
>
> Good question. However it is very clear in many IRS articles,
> publications, and instructions this is their stand. Check out
> page 2 of the 1065 instructions which state:
>
> "A qualified joint venture conducts a trade
> or business where: the only members of the
> joint venture are a married couple who file a
> joint return; both spouses materially
> participate in the trade or business, as mere
> joint ownership of property is not enough;
> both spouses elect not be treated as a
> partnership; and the business is co-owned
> by both spouses and is not held in the name
> of a state law entity such as a partnership or
> limited liability company."
>
> Of course this is unless the LLC hold community property. Then
> the husband and wife can choose between taxed as a partnership
> or a disregarded entity!
I don't see why community property would have anything to do with
> Stuart A. Bronstein wrote:
>
>> If the LLC is supposed to be a disregarded entity for federal
>> tax purposes, why is the IRS making a distinction between
>> spouses who are in business together as partners and spouses who
>> are in business together under the cover of an LLC that they are
>> the only owners of?
>
> Good question. However it is very clear in many IRS articles,
> publications, and instructions this is their stand. Check out
> page 2 of the 1065 instructions which state:
>
> "A qualified joint venture conducts a trade
> or business where: the only members of the
> joint venture are a married couple who file a
> joint return; both spouses materially
> participate in the trade or business, as mere
> joint ownership of property is not enough;
> both spouses elect not be treated as a
> partnership; and the business is co-owned
> by both spouses and is not held in the name
> of a state law entity such as a partnership or
> limited liability company."
>
> Of course this is unless the LLC hold community property. Then
> the husband and wife can choose between taxed as a partnership
> or a disregarded entity!
that election.
As I recall each of the states got a letter ruling on the taxation
of LLC's created under their laws. Perhaps it would be instructive
to look at those rulings.
--
Stu
http://DownToEarthLawyer.com
mammondee
Mar 29, 2014, 7:17:50 PM3/29/14
to
On Saturday, March 29, 2014 12:22:57 PM UTC-5, Stuart A. Bronstein wrote:
> mammondee wrote:
>
>
> I don't see why community property would have anything to do with
>
> that election.
>
>
>
> As I recall each of the states got a letter ruling on the taxation
>
> of LLC's created under their laws. Perhaps it would be instructive
>
> to look at those rulings.
Perhaps, but I think it has more to do with the IRS's stand on what is considered a "qualified joint venture".
>
>
> I don't see why community property would have anything to do with
>
> that election.
>
>
>
> As I recall each of the states got a letter ruling on the taxation
>
> of LLC's created under their laws. Perhaps it would be instructive
>
> to look at those rulings.
Stuart A. Bronstein
Mar 29, 2014, 7:49:50 PM3/29/14
to
mammondee <mmurr...@gmail.com> wrote:
the states the ability to create LLC's that are disregarded
entities. The code does not provide for LLC's, so it's the IRS
agreement, not the code, that will define situations involving
LLC's.
The IRS stand on qualified joint ventures with respect to LLC's is
meaningless without regard to the LLC letter agreement with the
state the LLC was created in.
Because if the letter ruling does not deal with the issue, then the
IRS position saying that LLC's owned by married couples are not
treated the same as partnerships between married couples is likely
to be contrary to law, and therefore unenforceable.
--
Stu
http://DownToEarthLawyer.com
> Stuart A. Bronstein wrote:
>>
>> I don't see why community property would have anything to do
>> with that election.
>>
>> As I recall each of the states got a letter ruling on the
>> taxation of LLC's created under their laws. Perhaps it would be
>> instructive to look at those rulings.
>
> Perhaps, but I think it has more to do with the IRS's stand on
> what is considered a "qualified joint venture".
That's my point. The letter rulings are basically the IRS giving
>>
>> I don't see why community property would have anything to do
>> with that election.
>>
>> As I recall each of the states got a letter ruling on the
>> taxation of LLC's created under their laws. Perhaps it would be
>> instructive to look at those rulings.
>
> Perhaps, but I think it has more to do with the IRS's stand on
> what is considered a "qualified joint venture".
the states the ability to create LLC's that are disregarded
entities. The code does not provide for LLC's, so it's the IRS
agreement, not the code, that will define situations involving
LLC's.
The IRS stand on qualified joint ventures with respect to LLC's is
meaningless without regard to the LLC letter agreement with the
state the LLC was created in.
Because if the letter ruling does not deal with the issue, then the
IRS position saying that LLC's owned by married couples are not
treated the same as partnerships between married couples is likely
to be contrary to law, and therefore unenforceable.
--
Stu
http://DownToEarthLawyer.com
Message has been deleted
mammondee
Apr 4, 2014, 4:02:19 PM4/4/14
to
On Tuesday, April 1, 2014 10:06:36 PM UTC-5, D. Stussy wrote:
> There are other types of "joint ventures" than between spouses.
>
Of course there are....but we have been specifically talking about "qualified joint ventures"
> There are other types of "joint ventures" than between spouses.
>
Of course there are....but we have been specifically talking about "qualified joint ventures"
Stuart A. Bronstein
Apr 4, 2014, 4:24:40 PM4/4/14
to
mammondee <mmurr...@gmail.com> wrote:
> D. Stussy wrote:
>> There are other types of "joint ventures" than between spouses.
>>
> Of course there are....but we have been specifically talking
> about "qualified joint ventures"
If a qualified joint venture requires the couple involved to file a
> D. Stussy wrote:
>> There are other types of "joint ventures" than between spouses.
>>
> Of course there are....but we have been specifically talking
> about "qualified joint ventures"
joint return, why would it make any difference (other than for
withholding tax issues)?
And if they want to do that, one could do a Schedule C and list the
other as an employee.
--
Stu
http://DownToEarthLawyer.com
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