Re: pass through tax liability


<jbrunner007@xxxxxxxxxxx> wrote
I am incorporating as an LLC in NY State. I know I am getting pass
through taxability with this...


Actually, unless you elect corporate tax treatment (and then "S" election),
you report your single member LLC activity on Schedule C.



I also read up on the fact you can file your tax status as a S CORP,
CORP, etc for federal taxes.


There is an election to be made, but that is an option. And - it isn't
something you can flip-flop back and forth on.


This is a business which will see losses
its first year for sure (maybe more years)...

My questions...

1. Say I have $5000 dollars worth of losses just from taking
prospective clients out to dinner, etc
or developing business presentation materials, Will some of those
losses (and the other losses from new equipment etc) be usuable to
lower my personal 1040 taxable income ?


As a Schedule C filer, yes. Sa an "S" corporate filer, only to the extent
you have basis. As a corporation, no.



Say I make $50,000 a year, but I spent $10,000 building my business,
does anyone know where I can read up on how to estimate what my
PERSONAL TAXES will look like, based on my self funded business startup
costs (hell, even establishing the business!).

Any tips, gotchas, etc. would be greatly appreciated...



Some, or all, of that $10,000 may be classified as "start-up" expenses that
get capitalized and possibly amortized over time. Other portions of that
$10,000 may be furniture, fixtures and equipment, also to be capitalized and
depreciated over time, but it's possible to be able to take SEction 179 and
directly expense them in the year you buy them and use them in your
business.


TIP: Go have a sit-down talk with a local CPA or EA who can ascertain what
your situation is, and then best advise you of all your options, as well as
discuss state and local tax issues.




--
Paul A. Thomas, CPA
Athens, Georgia


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