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Thursday, December 27, 2018

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Can an LLC Claim the R&D Tax Credit?

An LLC is treated like a sole proprietorship or partnership with an April 15th filing date and an extension date of October 15th. 

An LLC can elect to be treated liked a corporation and change their fiscal year. Avoiding the April 15th filing date allows the LLC to issue K-1's to its Owners and Partners before their personal returns are due.

What is a Schedule K-1?

When an LLC files an amended return as a part of submitting for the R&D Tax Credit, it will issue K-1's to its Owners and Partners. They will then use the form 1040X to amend their personal returns. The 1040X will reflect the gross R&D credit, a tax on that credit, and it will trigger a payment to the Owner for the net R&D credit.

In order to make this work, the LLC must have met its cut-off date for amending its Form 1065 and issued it's K-1's to the Owners. Without the K-1 from the LLC, the Owners do not have a basis for amending their personal returns.

The R&D Tax Credit & the K-1

Part III of the K-1 covers the R&D Tax Credit. What ultimately happens through the filing of these forms is, "flow-through" income and credits apply to the individual taxpayer's personal return, form 1040. Thus, the individual claims his share of the R&D Tax Credit.

How Do I Find Out If I Qualify?

The bottom line is, visit our site to determine if you qualify and see your potential savings in seconds with no upfront fees.




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