Question

I have a question about filing a Schedule C for an LLC. I have an active LLC, but I didn’t operate it or earn income from it this year. Do I still need to file a Schedule C?

Answer

If you have an active LLC but did not earn income from it during the tax year then the answer is no, you do not have to file a Schedule C for an LLC.

However, if you don’t file a Schedule C for an active LLC, then you can’t do the following:

  • Deduct any business expenses that could offset other income on your return
  • Report a loss that you can carry over to offset income on future returns

According to the IRS, you will use a Schedule C, Profit or Loss from Business, to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity.

An LLC would use the schedule C for Profit or Loss from Business because it is considered a business structure allowed by state statute. Because LLCs are formed in the state, each state assign different regulations. Therefore, it is important to contact your state for regulations regarding an LLC.

 

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