Dormant LLC taxes

[prusso99]

Hi

If I set up an LLC with an EIN (or multiple LLCs with their own respective EIN), and those LLCs do not generate any income at all, is it necessary to file taxes for those LLCs?

Basically, if the LLC (or LLCs) sit dormant with no business activity, do I still need to file taxes for those dormant LLCs?

Thanks

Paul

 

[Marshall]

If the LLCs are single member LLCs (see What is a Single Member LLC?) and you did NOT elect to have them treated as a corporation or S corporation, then you don't file a separate income return for the LLC even if it did have income. For tax purposes, it is a disregarded entity.

If you did elect to have the LLC treated as a corporation, the LLC must file a return even if it has no income.

 

[prusso99]

Marshall

Thank you very much for your answer. It makes perfect sense. The LLCs will be SMLLCs with the one member being another LLC. And since we did not elect to have them treated as a corporation I guess no tax return is needed.

Paul

 

[prusso99]

Hi Marshall

On a related note, does a newly formed LLC that is owned by another LLC (like you mentioned as a SMLLC), does the newly formed LLC need it's own EIN? Or can it use the EIN of the "parent" company.

Thanks

Paul

 

[Marshall]

Paul, a single member LLC that is owned by another LLC and treated as a disregarded entity should not get its own FEIN. As far as the IRS is concerned, the SMLLC is simply part of the existing LLC.