Llc Taxation Question...
My husband and I file our taxes together. In our future llc, should we file as a single member with spouse or seperate members. Which is more advantageous for taxation purposes. Any information on this subject would be greatly appreciated.
If you both are members of the LLC, then the LLC will have to file form 1065, and distribute K-1s to you and your husband. If only one of you is a member, then the LLC is a disregarded entity. (Assuming no other members, which I'm sure you mean)
There is really no tax differences to either, unless you consider the extra cost for your tax return preparer to prepare an extra return (the 1065).
I may be wrong but I thought that a husband/wife combo were still considered a single person in this case and, therefore, the LLC would be disregarded and not have to file a partnership, 1065, return.
It may have to do with whether or not you're in a community property state. See this IRS' recent revenue ruling for more info.
26 CFR 301.7701-3: Classification of certain business entities.
doll,
California is a community property state. IRS Rev. Proc. 2002-69 has some special instructions for your situation.
A business entity is a qualified entity if:The business entity is wholly owned by a husband and wife as community property under the laws of a state, a foreign country, or a possession of the United States;
No person other than one or both spouses would be considered an owner for federal tax purposes; and
The business entity is not treated as a corporation under § 301.7701-2.
If the business entity is a qualified entity, and the husband and wife (as community property owners) treat the entity as a disregarded entity for federal tax purposes, the Internal Revenue Service will accept the position that the entity is a disregarded entity for federal tax purposes.
Yeah, I suppose...
Iowa is a separate property state, so I didn't think of that...