Need To File Even If No Income?
Situation: Started a new multimember LLC and we purchased a property and performed rehab in '04 but did not put property into service before year end '04. We didn't generate any income of any kind. The expenditures on the property are considered capital expenditures and are added to the basis of the property and aren't considered expenses. And the prop wasn't put in service so there's no depreciation expense.
I'm sure many have been in this situation. Did you file a return (form 1065 in our case with LLC) for the year in question?
About the only expense that I would think could be recognized in '04 is the amortization of our organizational expenses. Say it cost us a couple hundred bucks to set up the LLC. I know that these organizational costs are amortized over no less than 60 months so maybe this prorated amortization would be recognized in '04. Another expense might be administrative expenses (like postage or business cards maybe?) that aren't directly attributable to the property we bought.
So, does anyone think a return should be filed showing $40 worth of expenses for '04?
Check with your tax advisor to be sure whether all startup costs have to be amortized, or is there some threshhold before amortization kicks in. Maybe you can expense all startup costs up to $50K then everything after that has to be amortized.
If your partnership had no income, then maybe your expenses can be declared as a net operating loss and carried forward to the next tax year.
Discuss with your tax advisor whether a tax return actually needs to be filed and Schedule K-1s issued to the partners in your situation. I don't know the answers, but it is worthwhile to you to ask the questions.
Ok, thx Kid