Single Member LLC Capital Contributions

4 Replies

I have a Single Member LLC where i have gave an initial capital. I do cash based accounting.

My question is since the initial capital doesn't count as income correct? then when i transferred a portion of the initial capital back to my personal account would that not be taxable and count as "Owners contribution/entity".


Then since i only took around 75% of my initial capital back to my personal account i would have  P&L which i would file a schedule C and use on my personal tax return correct?

Originally posted by @Daniil Kharlashko :

I have a Single Member LLC where i have gave an initial capital. I do cash based accounting.

My question is since the initial capital doesn't count as income correct? then when i transferred a portion of the initial capital back to my personal account would that not be taxable and count as "Owners contribution/entity".

Then since i only took around 75% of my initial capital back to my personal account i would have  P&L which i would file a schedule C and use on my personal tax return correct?

Yes, it’s a distribution. Not taxable. 

If you had any other P/L activity, yes you would file under Sch C. However, taking back the 75% initial contribution doesn’t create any income statement activity that warrants any reporting.  

 

I am curious, did you already filed your tax returns after you established your LLC? I filed my single-member LLC as "disregarded entity" and therefore it is not recognized as an entity separate from my personal for tax purposes, and my LLC real estate are in schedule E, not C. My accountant says that Schedule C is for "trade and business" and are subject to self-employment taxes. But for legal reasons, I do keep a separate bank accounts for the LLC and track the flow of capital to prevent from co-mingling funds.

@Ashish Acharya Thank you for the reply.

So the amount i took would not be included in any expenses correct?

Then the 75% i took back it would be unreported then correct?

Would i possible need another form for that? Or would the Schedule C from the business be enough to use on my personal taxes?

contributions and distributions to/from an entity are normally not considered a taxable event. The only exception is if you start taking distributions and your basis in the investment is $0.