Question

I have a question about reporting LLC losses — Can I report my LLC losses on my personal return?

Answer

Whether reporting LLC losses on your personal return is acceptable or not depends on the type of LLC you have.

When reporting LLC losses if you solely own the LLC, which isn’t a corporation:

  • File Schedule C to report income and expenses.
  • A Schedule C loss can offset other income on your personal return.

If your LLC has multiple owners and isn’t a corporation:

  • The LLC must file Form 1065: Return for Partnership Income.
  • If you have sufficient basis in your LLC ownership interest, reporting LLC losses on your personal return is acceptable.

If your LLC is an S corporation:

  • The LLC must file Form 1120-S.
  • If you have sufficient basis in your LLC ownership interest, you can claim a LLC loss on your personal return.

If your LLC is a C corporation:

  • The LLC must file Form 1120.
  • Since a C corporation is a separate taxable entity, profits and losses don’t flow to your personal return. So, you can’t claim a LLC loss on your personal return.

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