SMLLC Receives K1s

[BethB19]

I have a newly formed LLC owned by a husband + wife in a community property state.  I am choosing to treat as a SMLLC.  The SMLLC has received two K1's and I not sure how to report on the 1040.  I have read so many opinions that I am now unsure.  These are businesses (not rentals or investments).  Do I report on a Sch C, Sch E or just as a K1 on the Sch E page 2.  Also, there is section 179 to consider for the purchase of an asset in the SMLLC.  Thanks for the help. 

[sjrcpa]

The SMLLC is disregarded for tax purposes. So act like it doesn't exist. Enter the K-1s the same way you would enter K-1s issued in an individual's name.

What kind of asset did the SMLLC purchase? Is there a Sch C business or Sch E rental in addition to the K-1s?

[BethB19]

The asset was an automobile. There is no Sch C or Sch E.

BTW- thanks for responding. Totally cool of you! 

Just to be clear- just enter the K1 so it will report on SchE page 2 but in the individual's name.  Too simple. 

[sjrcpa]

Of course its a car.

What is the business use percent? I'm guessing zero since there is no business. No Section 179 and no depreciation.

[sjrcpa]

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@BethB19 wrote:

Just to be clear- just enter the K1 so it will report on SchE page 2 but in the individual's name.  Too simple. 

Maybe too simple but correct.

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[qbteachmt]

I don't understand this part: "These are businesses (not rentals or investments). Do I report on a Sch C, Sch E or just as a K1 on the Sch E page 2. Also, there is section 179 to consider for the purchase of an asset in the SMLLC."

They formed this LLC; they intend to "treat our personal car as business" which implies they are "doing" some sort of business. Otherwise, that would simply be Scamming the tax system, right?

"The asset was an automobile. There is no Sch C or Sch E"

So, are they or are they not "An LLC" or are they two "SMLLC" because so far, everything conflicts with each other here.

The people can have invested into other businesses, which spins off K-1. That would have nothing to do with their own need or operation of their own business as LLC or Sched C.

Who is giving these people their guidance?

[BethB19]

Thanks 🙂