Tax Return for LLC
Do you file a Tax Return for a Check Book IRA-LLC?
Well, normally you do not, because normally we set them up as a single-member LLC.
They are called the single-member entity, the IRS calls it a “Disregarded Entity”. And that simply means that whatever the LLC makes in profits, it doesn’t matter if it gives them back to the owner or it keeps them in its account. The taxes, the liability for the taxes flow through to the owner. So the owner is responsible for them.
The LLC isn’t responsible, the owner or the IRA is responsible. So, you can send the money from the LLC to the owner paying tax, or whatever, but the owner is responsible. And so the LLC is a disregarded entity. It is just like it is not there.
Well, who is the owner? The owner is the IRA. And IRA’s don’t normally owe a tax, in most cases, at the end of the year because you’re just buying and selling stuff.
Whether you are getting interest on a loan, or you buy a property and resell it, or you receive rents, or whatever it is, until you borrow money to buy something with your IRA, there is no tax.
So, because the LLC is tied to the IRA, there is no tax return filed at all. It is a single-member disregarded entity. The IRS knows that it will get its money when the money comes out of the IRA, and that will be reported and kept tracked of by the IRA custodian.
So there is no tax return on for the single member entity, single member LLC and checkbook IRA as long as you don’t buy property with borrowed money.