LLC Dissolved, Has new expense 2 years later. How to file

[familyfun]

2 person LLC filed final 1065 in 2015.  Expense incurred in 2017. Where to show expense in 2017.   Skip the part that LLC does not have to pay - partners also signed personally and funded the business expense.  They want to expense as a business... or at least show it as a lost on the first page of 1040 - not as an itemized deduction.

 

 

[Randall]

I think 1040 Sch A Misc deductions subject to 2% floor.

[Lion EA]

Some years back, I had a new client come to me; and in reviewing his prior years returns, I had him explain a Schedule E, page 2, Unreimbursed Partnership Expense that appeared on one year and not others, with no MMLLC line, just the UPE line.  He'd had the situation above and called the IRS (back when the IRS answered phone calls).  They told him to use Schedule E, page 2, as if the MMLLC was still open, as he would for any UPE.  So, he'd done that for that one year the partners personally paid an expense after they closed the LLC.  Now, with K-1 matching, that might generate an IRS letter.  I haven't had an occasion to look into it.  Keep researching to see if you can use that method for your client.

[jklcpa]

Not a tax preparer.

[SaraEA]

I've been to a couple of tax seminars this year where it was stated that even if a company is out of business, you can continue to file the Sch C/1065/1120 and claim lingering expenses like loan payments, vendor payments etc.  In your case was the last 1065 marked final?  If so, amend it and unmark the box for final return. Then continue to file using the line for UPEs.