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Inventory deduction

Jackson Lee
Level 2

Hello, my client has two LLCs, she created one LLC for the purpose of buying inventories and the other LLC she uses as the business to sell her products. For this situation, how can she deduct the inventory expenses on her tax return? and for the other LLC that has no income generated, what should she do about it? Thank you

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9 Replies 9
TaxGuyBill
Level 14

Are these Single Member LLCs that have not made an election to be taxed as a corporation?

If that is the case, they are "disregarded" for income tax purposes.  That would mean that for income tax purposes, SHE bought inventory and SHE sold the products.  It would all be one business.

Jackson Lee
Level 2

Yes, she is a single llc member, however she has two llcs. So she can just treat it as one business?

 

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TaxGuyBill
Level 14

As I said, they are "disregarded". For income tax purposes, you ignore that they exist.

Jackson Lee
Level 2

That makes more sense. thank you

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Just-Lisa-Now-
Level 15
Level 15

unless of course if youre in the state of CA, then you need to file 2 LLC tax returns and pay the annual LLC fee for each one.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
Jackson Lee
Level 2

so I have to file 2 LLCs tax returns but her other LLC generates no income only inventory expenses. How could I do that? thank you

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Jackson Lee
Level 2

I am sure that she always pay for her LLCs renewal.

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abctax55
Level 15

but her other LLC generates no income only inventory expenses

That is just NOT possible in the real tax world run by the IRS.  

Again, I ask (..on the other thread) - WHO came up with this hare-brained scheme and WHY?

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches
qbteachmt
Level 15

"but her other LLC generates no income only inventory expenses. How could I do that?"

It's not Reality. You know that.

The goal for any business is to show the income and the related costs that generate that income. That's a fundamental part of all of this.

"so I have to file 2 LLCs tax returns"

The Fed is filed using one Schedule C. Tell her why this is going to be combined. Then, have the person fix this situation, and whatever she paid for that guidance, I would recommend she gets a refund from that person. And then finds a better consultant.

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"Level Up" is a gaming function, not a real life function.
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