Entering K-1 for a single member LLC to flow to SCH C in proconnect

[Mary SASLLC]

Hello,

I need to enter K-1 issued to a single member LLC . how do I enter the K-1 to SCH C in Pro Connect tax online. This is what the LLC was created to do. It received 1099-DIV as income as well from the business investment activities. 

How to I enter the K-1 boxes to be linked with SCH C not as a rental or partnership for the individual. It can not be a passive loss to the business so it should flow to schedule C. 

[BobKamman]

Are you trying to make apple sauce from oranges, or marmalade from apples?  Your post suggests that the K-1 shows a loss, which indicates it was set up to be taxed as a corporation, then elected S status.   Its business is the same as the one shown on the Schedule C?  The Schedule C has other income not received from the LLC activities?  

Let me guess, someone went to a seminar.  

[Mary SASLLC]

Thank you for your response.

The answer to your question "if the business is the one on schedule C" is yes. The K-1 was issued to the Single member LLC business, and it is a loss from the business ordinary activity because the primary curse of the business is investments which is from REIT, securities and some real estate acquisitions. This is why I am skeptical about reporting it in the other income not received from the LLC activity section. the taxpayers name was not on the K-1. 

Any idea if it is possible to enter it in the K-1 1065 section in pro connect and link it to sch C or would I just have to enter it as an ordinary business or loss directly on the sch C. 

Your input is highly appreciated. 

Also, just for clarification, my post does not indicate that the LLC elected to be treated as a Corp, nor did it indicate that it elected S-corp. Thanks for the observation. I can provide clarification If i was not clear enough, and I don't understand the seminar part, that was not necessary. please elaborate. 

[BobKamman]

How else would a single-member LLC be issuing a K-1, if not as an S corporation?  Otherwise you have a disregarded entity.

I like the part about the primary curse of the business.  

[Mary SASLLC]

oh, my bad. I see where I was not clear enough. The LLC did not issue the K-1, the LLC received the K-1 from its investments. Although that one was a loss, it did receive a 1099-DIV from another investment. the LLC is a partner in an REIT investment which it received its K-1 from. 

I was confused on how to enter the LLC K-1 received in its sch C, or maybe to just enter it in the general K-1 section which would be reported as a passive loss that won't flow directly to the SCH C.... pls correct or enlighten me if I am wrong lol... Thanks. 

[sjrcpa · Accepted solution]

If the single member LLC is disregarded for tax purposes, you disregard it. Enter the K-1 and 1099-DIV as you would if it was in the name of your individual client. These do not go on Schedule C.

[BobKamman]

Probably not a scheme for evading SE tax, but that's how it would look to IRS.  

[qbteachmt]

"This is what the LLC was created to do. It received 1099-DIV as income as well from the business investment activities."

I'm trying to understand this part. You want it on Sched C as if there is a business being operated? Like, for instance, your taxpayer formed the LLC to "be an angel investor?" Or, is a venture capitalist?

[Mary SASLLC]

Thank you all for your input, from all the responses, I want to be sure am understanding the message. The suggested conclusion is It should be entered directly into the tax return as it should if the LLC name was not on the K1 or the 1066-DIV since the business is a disregarded entity, correct? !!!!

[sjrcpa]

Correct!

[qbteachmt]

If your person is running this as a business, such as, has employee(s), that is why Sched C (part of 1040) exists. You stated:

"This is what the LLC was created to do. It received 1099-DIV as income as well from the business investment activities."

So far, we haven't see how this is business.

Whether they formed an LLC or not is not always a good test, because too many people are following Tik Tok or other advice that is meaningless and/or wrong for their needs.

Having a SMLLC might not have anything to do with their investment activities. Let me give an example:

A person can lend money to others. They don't need to have an LLC to lend money. But one of my clients, with the support of a administrative assistant, was in business as a provider and lender for Man Camps in the oil fields. Essentially, mobile homes. They are required to obtain a FEIN when there is payroll, even if they are not an LLC. Whether running under an LLC (which is a State construct) or just the EIN (for payroll needs), the person's business activity is Sched C = in business.