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  • California Community Property

    From Stuart O. Bronstein@21:1/5 to All on Tue Jun 25 16:39:23 2024
    For community property states, spouses with an LLC can either be taxed as a partnership or each spouse can file his/her own separate Schedule C.

    My question is, does that same rule apply to California state taxes? It
    does as far as I can tell, but I haven't found anything definitive.

    Thanks.


    --
    Stu
    http://DownToEarthLawyer.com

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  • From Alan Kalman@21:1/5 to Stuart O. Bronstein on Tue Jul 2 13:45:27 2024
    On 6/25/24 1:39 PM, Stuart O. Bronstein wrote:
    For community property states, spouses with an LLC can either be taxed as a partnership or each spouse can file his/her own separate Schedule C.

    My question is, does that same rule apply to California state taxes? It
    does as far as I can tell, but I haven't found anything definitive.

    Thanks.


    I believe your opening statement is incorrect. Page 3 of the
    instructions for the Form 1065 clearly states that the election to be
    treated as a Joint Venture is only available if "the business is
    co-owned by both spouses and isn't held in the name of a state law
    entity such as a partnership or limited liability company (LLC)."
    Therefore, they are a partnership and can not file their own Schedule Cs.
    --
    Alan

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    << nor can it used, for the purpose of avoiding penalties >>
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  • From Stuart O. Bronstein@21:1/5 to Alan Kalman on Tue Jul 2 17:03:19 2024
    Alan Kalman <[email protected]> wrote:
    Stuart O. Bronstein wrote:

    For community property states, spouses with an LLC can either be
    taxed as a partnership or each spouse can file his/her own separate
    Schedule C.

    My question is, does that same rule apply to California state taxes?
    It does as far as I can tell, but I haven't found anything
    definitive.

    I believe your opening statement is incorrect. Page 3 of the
    instructions for the Form 1065 clearly states that the election to be
    treated as a Joint Venture is only available if "the business is
    co-owned by both spouses and isn't held in the name of a state law
    entity such as a partnership or limited liability company (LLC)."
    Therefore, they are a partnership and can not file their own Schedule
    Cs.

    Thanks. I was thinking the rules without an LLC would be the same as with
    an LLC. But you're apparently right - the rules with an LLC are different. Even though the LLC is normally disregarded, it's not for this purpose.

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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  • From Bob Sandler@21:1/5 to [email protected] on Tue Jul 2 16:55:27 2024
    On Tue, 2 Jul 2024 13:45:27 EDT, Alan Kalman
    <[email protected]> wrote:
    On 6/25/24 1:39?PM, Stuart O. Bronstein wrote:
    For community property states, spouses with an LLC can either be taxed as a >> partnership or each spouse can file his/her own separate Schedule C.

    My question is, does that same rule apply to California state taxes? It
    does as far as I can tell, but I haven't found anything definitive.


    I believe your opening statement is incorrect. Page 3 of the
    instructions for the Form 1065 clearly states that the election to be
    treated as a Joint Venture is only available if "the business is
    co-owned by both spouses and isn't held in the name of a state law
    entity such as a partnership or limited liability company (LLC)."
    Therefore, they are a partnership and can not file their own Schedule Cs.
    --
    Alan

    Stuart Bronstein's statement is correct "for community
    property states." In a community property state, such as
    California, if the spouses hold the LLC as community
    property, they can treat it as a disregarded entity.

    See Rev. Proc. 2002-69.
    http://www.irs.gov/pub/irs-drop/rp-02-69.pdf

    That, of course, applies to federal tax. I don't know the
    answer to Stuart's question, which is whether the same rule
    applies to California tax.

    Bob Sandler

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
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    << ------------------------------------------------------- >>

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  • From Alan Kalman@21:1/5 to Bob Sandler on Tue Jul 2 17:20:14 2024
    On 7/2/24 1:55 PM, Bob Sandler wrote:
    On Tue, 2 Jul 2024 13:45:27 EDT, Alan Kalman
    Stuart Bronstein's statement is correct "for community
    property states." In a community property state, such as
    California, if the spouses hold the LLC as community
    property, they can treat it as a disregarded entity.

    See Rev. Proc. 2002-69.
    http://www.irs.gov/pub/irs-drop/rp-02-69.pdf

    That, of course, applies to federal tax. I don't know the
    answer to Stuart's question, which is whether the same rule
    applies to California tax.

    Bob Sandler

    I stand corrected. As such, then FTB Pub 3556 says that CA follows the
    federal entity (partnership or disregarded) classification. As such, you
    have a disregarded entity and the information on Federal Schedule Cs
    should flow as is to CA.
    --
    Alan

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
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    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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  • From Bob Sandler@21:1/5 to All on Tue Jul 2 17:47:57 2024
    On Tue, 2 Jul 2024 17:03:19 EDT, "Stuart O. Bronstein"
    Alan Kalman <[email protected]> wrote:
    I believe your opening statement is incorrect. . . .

    Thanks. I was thinking the rules without an LLC would be the same as with
    an LLC. But you're apparently right - the rules with an LLC are different. >Even though the LLC is normally disregarded, it's not for this purpose.

    In a community property state the LLC CAN be disregarded if
    the spouses are the only members and they own their interest
    in the LLC as community property. See Rev. Proc. 2002-69.

    http://www.irs.gov/pub/irs-drop/rp-02-69.pdf

    Bob Sandler

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
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  • From John Levine@21:1/5 to All on Tue Jul 2 17:20:57 2024
    According to Alan Kalman <[email protected]>:
    On 6/25/24 1:39 PM, Stuart O. Bronstein wrote:
    For community property states, spouses with an LLC can either be taxed as a >> partnership or each spouse can file his/her own separate Schedule C.

    I think that second part is wrong.

    I believe your opening statement is incorrect. Page 3 of the
    instructions for the Form 1065 clearly states that the election to be
    treated as a Joint Venture ...

    But that's also wrong.

    There's a special rule for spouse LLCs in community property states
    that are allowed to treat the LLC as a disregarded entity, like a sole proprietorship.

    See the last part of

    https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies

    --
    Regards,
    John Levine, [email protected], Primary Perpetrator of "The Internet for Dummies",
    Please consider the environment before reading this e-mail. https://jl.ly

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    << >>
    << The Charter and the Guidelines for submitting posts >>
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  • From Stuart O. Bronstein@21:1/5 to Bob Sandler on Tue Jul 2 18:50:23 2024
    Bob Sandler <[email protected]> wrote in news:[email protected]:

    On Tue, 2 Jul 2024 17:03:19 EDT, "Stuart O. Bronstein"
    Alan Kalman <[email protected]> wrote:
    I believe your opening statement is incorrect. . . .

    Thanks. I was thinking the rules without an LLC would be the same as
    with an LLC. But you're apparently right - the rules with an LLC are >>different. Even though the LLC is normally disregarded, it's not for
    this purpose.

    In a community property state the LLC CAN be disregarded if
    the spouses are the only members and they own their interest
    in the LLC as community property. See Rev. Proc. 2002-69.

    http://www.irs.gov/pub/irs-drop/rp-02-69.pdf

    Thanks. I looked at that revenue ruling and it confused me.


    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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