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Multimember LLC is sole member of another LLC

Forum|Forum|2 years ago
March 12, 2024
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ABC LLC is a multi-member LLC. It is the "sole" member of DEF LLC but I understand that DEF LLC is still a multi-member LLC to the IRS. Where I'm at a loss is the funding of DEF LLC. ABC LLC wrote a check for $10k to fund the start of DEF LLC. My two questions are

1. In Turbo Tax, I'm creating the new DEF LLC and it's asking for member contributions. Am I splitting it between the 2 members of ABC LLC or do I put somewhere that the $10k came from ABC LLC?

2. What is that $10k in relation to the taxes for ABC LLC? Is it a business expense? A distribution to the members and then the members contribution to start DEF LLC (perhaps answering question 1)?

Thank you

TurboTax Business Windows

Best answer by Rick19744

A few comments regarding your issue:

DEF LLC is not a multi-member LLC as you noted. It is a single-member LLC of ABC LLC; a disregarded entity for tax purposes.
As such, DEF LLC does not file it's own tax return. It is treated as if it was a division of ABC LLC.
As a result, there will only be one tax return and all activity of DEF LLC is reported on the return for ABC LLC.

Rick19744Answer

A few comments regarding your issue:

DEF LLC is not a multi-member LLC as you noted. It is a single-member LLC of ABC LLC; a disregarded entity for tax purposes.
As such, DEF LLC does not file it's own tax return. It is treated as if it was a division of ABC LLC.
As a result, there will only be one tax return and all activity of DEF LLC is reported on the return for ABC LLC.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.