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CA LLC Tax. Where on return?

 
 
Etienne
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      01-23-2006, 07:52 AM
I am doing my 2005 taxes using TurboTax premier.

I paid $800 California LLC tax.

I heard that this is deductible for Federal taxes (not for
CA state tax).

The LLC is a disregarded entity. Where do I enter the LLC
tax as an expense on my Schedule C (in Turbotax), under
"Other Expenses"?

Thanks,

Etienne

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A.G. Kalman
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      01-24-2006, 04:41 AM
Etienne wrote:

> I am doing my 2005 taxes using TurboTax premier.
>
> I paid $800 California LLC tax.
>
> I heard that this is deductible for Federal taxes (not for
> CA state tax).
>
> The LLC is a disregarded entity. Where do I enter the LLC
> tax as an expense on my Schedule C (in Turbotax), under
> "Other Expenses"?


An individual is only allowed to deduct state income taxes
on Form 1040 Schedule A. It is not a business expense.
Partnerships and corporations may treat it as a business
expense.

The only exception to this rule is when the income tax is
imposed on gross income rather than net income.

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Katie
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      01-24-2006, 05:01 AM
Line 23, Taxes and Licenses.

Katie in San Diego

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Stuart A. Bronstein
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      01-24-2006, 11:05 PM
"A.G. Kalman" <glendale202-> wrote:
> Etienne wrote:


>> I paid $800 California LLC tax.
>>
>> I heard that this is deductible for Federal taxes (not for
>> CA state tax).
>>
>> The LLC is a disregarded entity. Where do I enter the LLC
>> tax as an expense on my Schedule C (in Turbotax), under
>> "Other Expenses"?


> An individual is only allowed to deduct state income taxes
> on Form 1040 Schedule A. It is not a business expense.
> Partnerships and corporations may treat it as a business
> expense.


Why isn't it a business expense? If you have a one-person
LLC and elect not to be taxed as a corporation, wouldn't you
put it all on Schedule C?

Stu

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<< and does NOT constitute legal OR professional advice. >>
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Katie
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      01-24-2006, 11:06 PM
?? Alan, I'm not sure why the $800 minimum tax for the LLC
wouldn't be a legitimate business expense. What am I
missing?

Katie

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<< and does NOT constitute legal OR professional advice. >>
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A.G. Kalman
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      01-24-2006, 11:06 PM
A.G. Kalman wrote:
> Etienne wrote:


>> I am doing my 2005 taxes using TurboTax premier.
>>
>> I paid $800 California LLC tax.
>>
>> I heard that this is deductible for Federal taxes (not for
>> CA state tax).
>>
>> The LLC is a disregarded entity. Where do I enter the LLC
>> tax as an expense on my Schedule C (in Turbotax), under
>> "Other Expenses"?


> An individual is only allowed to deduct state income taxes
> on Form 1040 Schedule A. It is not a business expense.
> Partnerships and corporations may treat it as a business
> expense.
>
> The only exception to this rule is when the income tax is
> imposed on gross income rather than net income.


Disregard my answer. Katie is correct. This is not a state
income tax.

<< ================================================== ===== >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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L K Williams
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      01-24-2006, 11:26 PM
"A.G. Kalman" <glendale202-> wrote:
> Etienne wrote:


>> I am doing my 2005 taxes using TurboTax premier.
>>
>> I paid $800 California LLC tax.
>>
>> I heard that this is deductible for Federal taxes (not for
>> CA state tax).
>>
>> The LLC is a disregarded entity. Where do I enter the LLC
>> tax as an expense on my Schedule C (in Turbotax), under
>> "Other Expenses"?


> An individual is only allowed to deduct state income taxes
> on Form 1040 Schedule A. It is not a business expense.
> Partnerships and corporations may treat it as a business
> expense.
>
> The only exception to this rule is when the income tax is
> imposed on gross income rather than net income.


California charges $800 as a franchise tax, not an income
tax. Entities subject to this tax must pay at least $800.
True, if they make enough the tax could be higher. But, the
key point here is that, even if the entitly LOSES money, it
must pay the minimum $800.

It is a business expense, not deducible on Schedule A but on
Schedule C as taxes and licenses.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

<< ================================================== ===== >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
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<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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A.G. Kalman
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      01-25-2006, 11:24 PM
Katie wrote:

> ?? Alan, I'm not sure why the $800 minimum tax for the LLC
> wouldn't be a legitimate business expense. What am I
> missing?


You're not missing anything. I withdrew my response. I chalk
it up to moving to New Mexico. I'm having California brain
drain..............

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