LLC opened and dissolved same year

[bstaxes]

H & W opened LLC in summer of 2008 and dissolved in fall of 2008. Paid for the creation and closing of business, had no sales. H & W realized the sales market went south right after opening business (high end artifacts). IRS will be looking for form 1065 by 4/15/09. It seems odd to file 1065 with just expenses and no income (but that is the economy). Might the IRS decide to audit or perhaps deny the expenses. They have given me all the paper work on the business. Any ideas or suggestion would be helpful. Their personnel return is going on an extension but I would like to get this 1065 out of the way.

[RitaB]

H & W opened LLC in summer of 2008 and dissolved in fall of 2008. Paid for the creation and closing of business, had no sales. H & W realized the sales market went south right after opening business (high end artifacts). IRS will be looking for form 1065 by 4/15/09. It seems odd to file 1065 with just expenses and no income (but that is the economy). Might the IRS decide to audit or perhaps deny the expenses. They have given me all the paper work on the business. Any ideas or suggestion would be helpful. Their personnel return is going on an extension but I would like to get this 1065 out of the way.

I don't think you'll have a problem at all. At least your clients had the good sense to get out of business before it dragged on for years. Those are the ones I can't figure out! Why is IRS not checking on them? It doesn't appear to me that they notice the same things I do...

[schirallicpa]

Ok - maybe this is dumb question.

LLC is a state designation. A partnership is paperwork filed at the county office. Why is the IRS looking for anything? A partnership agreement can be created and dissolved with no activity and certainly no tax info reporting. The state - depending on what state - may have sucked up an extra fee to dissolve to LLC designation. What does the IRS care of that any more than they care if you got married and turned around and got divorced - especially if there is no income.

[kcjenkins]

But there were expenses, and those should be claimed. At least the tax deduction will ease a bit of the pain of the loss.

[Gail in Virginia]

Ok - maybe this is dumb question.

LLC is a state designation. A partnership is paperwork filed at the county office. Why is the IRS looking for anything? A partnership agreement can be created and dissolved with no activity and certainly no tax info reporting. The state - depending on what state - may have sucked up an extra fee to dissolve to LLC designation. What does the IRS care of that any more than they care if you got married and turned around and got divorced - especially if there is no income.

The IRS will be looking for the partnership return because of the EIN that they filed for. That told the IRS that the partnership existed. Until you file the return and mark it final, they won't know that the business tanked.

[OldJack]

They need to file partnership tax return and account for the expenses. Odds are those so called expenses included the purchase of assets that cannot be depreciated or expensed as they will flow thru to the individual owners in liquidation.