LLC

Matt McLain · January 25th, 2008, 04:16 PM

Hi,

I have an LLC with three of my friends, and I'm thinking of taking out a loan to purchase some equipment. I understand that being part of an LLC enables one to deduct the loan costs (interest and such) on one's own tax forms. What I'm wondering is if I go ahead and do this, do I need to apply for the loan and include the name of the business? I know I'd be personally liable should I default, and that's fine, but I would like to be able to deduct this thing from my taxes.

Any advice would be much appreciated. Thanks.

Don Bloom · January 25th, 2008, 04:59 PM

let me suggest 2 things. Check with a lawyer and an accountant. They are the professionals in that arena an would have all the RIGHT answers.
Don

Martin Pauly · January 25th, 2008, 05:06 PM

Yes, check with a professional. At first glance, though: the interest that your LLC pays for its loan will be an expense that can be deducted from the LLC's income, not your personal income. If, overall, the LLC posts a loss at the end of the year, that loss may be transferred to the members/owners, according to the distribution system that all the owners have agreed on.

The basic rule is that the LLC and its owners are treated separately. An expense for the company is not automatically a tax deductable expense for you.

- Martin

Craig Chartier · January 25th, 2008, 05:25 PM

each member will receive a Schedule K ? ( I believe thats the one ) that will need to be attached and rolled into each members personal taxes. You really need a tax person to prepare the paperwork for the LLC even if you do your own personal taxes. IMO

January 25th, 2008, 04:16 PM	#1
Matt McLain Regular Crew Join Date: Feb 2004 Location: bloomington, il Posts: 40	LLC - Loan Hi, I have an LLC with three of my friends, and I'm thinking of taking out a loan to purchase some equipment. I understand that being part of an LLC enables one to deduct the loan costs (interest and such) on one's own tax forms. What I'm wondering is if I go ahead and do this, do I need to apply for the loan and include the name of the business? I know I'd be personally liable should I default, and that's fine, but I would like to be able to deduct this thing from my taxes. Any advice would be much appreciated. Thanks.

January 25th, 2008, 05:06 PM	#3
Martin Pauly Major Player Join Date: Apr 2006 Location: Cedar Rapids, IA Posts: 563	Yes, check with a professional. At first glance, though: the interest that your LLC pays for its loan will be an expense that can be deducted from the LLC's income, not your personal income. If, overall, the LLC posts a loss at the end of the year, that loss may be transferred to the members/owners, according to the distribution system that all the owners have agreed on. The basic rule is that the LLC and its owners are treated separately. An expense for the company is not automatically a tax deductable expense for you. - Martin __________________ Martin Pauly

January 25th, 2008, 04:59 PM	#2
Don Bloom Inner Circle Join Date: Jan 2003 Location: Chicago, IL Posts: 6,609	let me suggest 2 things. Check with a lawyer and an accountant. They are the professionals in that arena an would have all the RIGHT answers. Don

January 25th, 2008, 05:25 PM	#4
Craig Chartier DVi Contributor Join Date: Mar 2006 Location: Austin Texas Posts: 374	each member will receive a Schedule K ? ( I believe thats the one ) that will need to be attached and rolled into each members personal taxes. You really need a tax person to prepare the paperwork for the LLC even if you do your own personal taxes. IMO