Land Titled to LLC, But Note Still In Individual's Social Security Number

Client quick claim deeded 160 acres to his LLC in December of 2012. The note for this land remains in his personal name and social security number, therefore
the 1098 comes in his personal name and social security number.
The LLC was formed in September with the only members being the client and his wife. The LLC is being taxed as a partnership. In 2012 the only income in the LLC is about $3,000 from share-cropping as the client worked full time elsewhere.
What do I do with the $20,000 of interest from this 1098?
The client and his wife will farm the land themselves full time in 2013. (no share-cropping and no other job).
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mammondee wrote:

If the land is all business, the 1098 of 20k mortgage interest is a business expense. There was 3k of income. Thus a 17k loss in all. There would be other expenses like propoperty tax. Anywyay, this amount gets reported on Schedule C (if this is a single person LLC), or on form 1065 and then on your 1040 Schedule E page 2 (if this is a multi person LLC, which is the case here). You can use it to balance out your W-2 and other types of income. If it turns out your AGI is negative, then you have a net operating loss (NOL) and you can apply the business loss to previous years or future years (2 year back, 20 years forward). This kind of means that you file an amended return for 2 years back and claim the loss on that year's tax return, though NOLs can get complicated.
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On Monday, April 8, 2013 3:39:39 PM UTC-5, remove ps wrote:

My real question is how do I avoid IRS computer matching problems with the 1098 INT being submitted in the taxpayer's personal social security number. I wanted to deduct the interest on the LLC return, but the mortgage and interest is in the taxpayer's personal name.
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"mammondee" wrote in message On Monday, April 8, 2013 3:39:39 PM UTC-5, remove ps wrote:

My real question is how do I avoid IRS computer matching problems with the 1098 INT being submitted in the taxpayer's personal social security number. I wanted to deduct the interest on the LLC return, but the mortgage and interest is in the taxpayer's personal name.
=============== On WHAT LLC return? A husband/wife joint venture need not file a partnership return. It goes on a pair of Schedule C's attached to a joint 1040. That eliminates your 1098 mismatch problem.
(cf. The Small Business and Work Opportunity Tax Act of 2007.) http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses ... And plenty of other "Google hits" (about 164,000).
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On Monday, May 13, 2013 8:30:36 PM UTC-5, D. Stussy wrote:

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses

This business is being operated through an LLC and not a husband/wife co-owners. The owners want the liability protection offered by the LLC form of business. Quoted from your references:
"A business owned and operated by the spouses through a limited liability company does not qualify for the election. Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election."
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"mammondee" wrote in message On Monday, May 13, 2013 8:30:36 PM UTC-5, D. Stussy wrote:

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses

This business is being operated through an LLC and not a husband/wife co-owners. The owners want the liability protection offered by the LLC form of business. Quoted from your references:
"A business owned and operated by the spouses through a limited liability company does not qualify for the election. Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election." =============== That's not what you initially said. You said, "The LLC was formed in September with the only members being the client and his wife." That means that it is a H/W joint venture, because you told us they were the ONLY owners. An LLC is a disregarded entity for tax purposes - it doesn't exist. What they are referring to is an LLC which isn't a H/W joint-venture because there are other owners.
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On Sunday, April 7, 2013 3:16:42 PM UTC-7, mammondee wrote:

Did you ever figure out how to handle this? I am facing a similar situation.
========================================= MODERATOR'S COMMENT: In future messages, please trim the text including our own boiler plate
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wrote in message On Sunday, April 7, 2013 3:16:42 PM UTC-7, mammondee wrote:

Husband/wife joint ventures belong on form 1040, and the LLC doesn't matter (it is disregarded for tax purposes), so it ends up on Schedule A. Therefore, what is the issue?
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So they lose that interest deduction (and least for now)? Sounds like they should have gotten better tax advice before setting up the LLC in the first place.
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Since they're working the land as a farm, wouldn't they use Schedule F? Farm mortgage interest goes on line 21a.
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"John Levine" wrote in message

Since they're working the land as a farm, wouldn't they use Schedule F? Farm mortgage interest goes on line 21a.
=========To address the missing post: If they were to take it on Schedule A, how are they losing a deduction? The amount itself is greater than the standard deduction for any category....
Now, as for Schedule F treatment, in this capacity, wouldn't this be a passive activity where they DO lose current use of the deduction...?
I focused purely on the issue of the 1099 reporting. That's not a problem - there's no tax issue.
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You can credit passive expenses against passive income, so I'd think they could at least credit against the sharecropping income. There's also a special $25,000 allowance to deduct passive losses from real estate. I have no idea whether sharecropping counts as real estate, farming, neither, or both.
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"John Levine" wrote in message

You can credit passive expenses against passive income, so I'd think they could at least credit against the sharecropping income. There's also a special $25,000 allowance to deduct passive losses from real estate. I have no idea whether sharecropping counts as real estate, farming, neither, or both. ===========Farming (by the owner) on Schedule F does NOT count as "rental real estate." A farm rental reported on Form 4835 may.
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On Tuesday, March 25, 2014 12:18:09 AM UTC-5, D. Stussy wrote:

I am the original poster, and I still have my original question of the 1099 int is issued in the individual's SS# and not the Partnership's EIN. I wonder about the matching issue with the IRS. Should I nominee 1099INT the interest from the individual to the partnership??
As far as this being a disregarded entity, as D Stussy suggests, I respectfully disagree. If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities.
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"mammondee" wrote in message As far as this being a disregarded entity, as D Stussy suggests, I respectfully disagree. If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities. =============The IRS disagrees with you. Community property has nothing to do with this.
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D Stussy writes:

Au contraire mon frère....The IRS very much agrees with me! We have been arguing this point for almost a year now!
The following is a direct quote from the IRS website when referring to the qualified joint venture election.
" A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company)"..........."A business owned and operated by the spouses through a limited liability company does not qualify for the election: Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election. See Rev. Proc. 2002-69, 2002-2 C.B. 831, for special rules applicable to husband and wife state law entities in community property states.
Rev. Proc. 2002-69 in summary states that a LLC wholly owned by a husband and wife can choose to be a partnership or a disregarded entity IF the property is held as community property.
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses
another IRS article reads "Note: If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities."
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Single-Member-Limited-Liability-Companies near the bottom)
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"mammondee" wrote in message
D Stussy writes:

Au contraire mon frère....The IRS very much agrees with me! We have been arguing this point for almost a year now! The following is a direct quote from the IRS website when referring to the qualified joint venture election.
" A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company)"..........."A business owned and operated by the spouses through a limited liability company does not qualify for the election: Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election. See Rev. Proc. 2002-69, 2002-2 C.B. 831, for special rules applicable to husband and wife state law entities in community property states.
Rev. Proc. 2002-69 in summary states that a LLC wholly owned by a husband and wife can choose to be a partnership or a disregarded entity IF the property is held as community property.
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses
another IRS article reads "Note: If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities."
source: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Single-Member-Limited-Liability-Companies near the bottom) ================ I could be wrong, but my recollection is that we were told something different at the IRS tax forums some years ago.
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If the LLC is supposed to be a disregarded entity for federal tax purposes, why is the IRS making a distinction between spouses who are in business together as partners and spouses who are in business together under the cover of an LLC that they are the only owners of?
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On Friday, March 28, 2014 5:13:56 PM UTC-5, Stuart A. Bronstein wrote:

Good question. However it is very clear in many IRS articles, publications, and instructions this is their stand. Check out page 2 of the 1065 instructions which state:
"A qualified joint venture conducts a trade or business where: the only members of the joint venture are a married couple who file a joint return; both spouses materially participate in the trade or business, as mere joint ownership of property is not enough; both spouses elect not be treated as a partnership; and the business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company." Of course this is unless the LLC hold community property. Then the husband and wife can choose between taxed as a partnership or a disregarded entity!
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I don't see why community property would have anything to do with that election.
As I recall each of the states got a letter ruling on the taxation of LLC's created under their laws. Perhaps it would be instructive to look at those rulings.
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