CA LLC Tax. Where on return?

Discussion in 'Tax' started by Etienne, Jan 23, 2006.

  1. Etienne

    Etienne Guest

    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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    << and does NOT constitute legal OR professional advice. >>
    << >>
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    Etienne, Jan 23, 2006
    #1
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  2. Etienne

    A.G. Kalman Guest

    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.

    << ======================================================= >>
    << 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. >>
    << ======================================================= >>
     
    A.G. Kalman, Jan 24, 2006
    #2
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  3. Etienne

    Katie Guest

    Line 23, Taxes and Licenses.

    Katie in San Diego

    << ======================================================= >>
    << 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. >>
    << ======================================================= >>
     
    Katie, Jan 24, 2006
    #3
  4. "A.G. Kalman" <> 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

    << ======================================================= >>
    << 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. >>
    << ======================================================= >>
     
    Stuart A. Bronstein, Jan 24, 2006
    #4
  5. Etienne

    Katie Guest

    ?? 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

    << ======================================================= >>
    << 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. >>
    << ======================================================= >>
     
    Katie, Jan 24, 2006
    #5
  6. Etienne

    A.G. Kalman Guest

    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. >>
    << ======================================================= >>
     
    A.G. Kalman, Jan 24, 2006
    #6
  7. Etienne

    L K Williams Guest

    "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.


    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. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    L K Williams, Jan 24, 2006
    #7
  8. Etienne

    A.G. Kalman Guest

    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..............

    << ======================================================= >>
    << 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. >>
    << ======================================================= >>
     
    A.G. Kalman, Jan 25, 2006
    #8
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