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LLC expenses- where to claim?

I am a member of an LLC which was formed as a means to take title of an airplane. We do not operate a business, and our only income is interest from a savings account. We file a partnership return, on which we show the interest income.

We pay real estate tax on the hangar the plane is in and personal property tax on the plane. Is there a place on the partnership return to deduct these expenses? They don't appear to qualify as an operating expense or investment expense. Prior to forming the LLC, we deducted them on Sch. A.

Reply to
CBaker
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Nobody else has responded to this, so I'll give it a shot.

You admit that the partnership is not in business to make a profit, and you aren't even trying to make money from it. That makes it a hobby, making your expenses non-deductible. It may be possible that you can take deductions up to the amount of interest the partnership receives, but that depends on what you use the bank account for.

Stu

Reply to
Stuart A. Bronstein

I agree that there is no business being operated. However, even when you have a hobby (not for profit activity), nonbusiness deductions such as real and personal property taxes fall into "Category 1" and are allowed in full on the individual's Schedule A. I believe each partner can deduct on their individual Schedule As, their share of any personal property taxes paid on the plane. The OP stated that they paid real estate taxes on the hangar. There is no mention of the LLC owning any real property. So I don't know why they would be paying real estate taxes. But, if they did own real property and paid real property taxes, then the fair share of that payment would be deductible on the Schedule A.

Reply to
Alan

The savings account is used to accumulate money for the eventual replacement of the airplane engines. Each member contrubutes to the account based on the hours flown. If this qualifies, where would it go on the return? Thanks for your help.

Reply to
CBaker

On Jan 31, 12:17 pm, "Stuart A. Bronstein"

Is the following valid:

The partnership expenses flow through to each partner via Schedule K-1, and then the partner, depending upon whether their interest in the airplane is business or hobby/personal, reports the expense in the appropriate place on their individual return. This might be Schedule A.

Is there anything incorrect here?

Steve

Reply to
Steve Pope

We have never claimed any expenses on the partnership return, but if we did they would flow through via the K-1 to each partner. I assume they would be entered on the individual return on the line as directed in the K-1 instructions. We have had only one item on the partnership return (the dividend income) and it flows through to each partner to Ln. 9a, Ordinary Dividends, as indicated on the K-1 instructions.

Reply to
CBaker

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