Side gig business setup and expenses

[mousebandit]

Husband and I are doing real estate flips as a side gig.  We have our contractors license here in Oregon, and have set up an LLC with each of us as members to do the business.

I also got my real estate broker's license to facilitate the finding, buying, and selling of the properties.  I only do transactions for us to flip, nothing for anyone else. 

Can I run my real estate expenses under the LLC, so that I don't have to file a Schedule C (for real estate) and a Partnership (for LLC) come tax time?  I'm thinking I can, as long as I only do transactions for our flips, and nothing else. 

What say the experts? 

Thanks!

[jpdx]

Yes. Your partnership can deduct any expenses that are ordinary and necessary incurred in conducting your business, and it sure sounds like your broker license costs fits that description.

[Wile E. Coyote]

Husband and I are doing real estate flips as a side gig.  We have our contractors license here in Oregon, and have set up an LLC with each of us as members to do the business.

I also got my real estate broker's license to facilitate the finding, buying, and selling of the properties.  I only do transactions for us to flip, nothing for anyone else. 

Can I run my real estate expenses under the LLC, so that I don't have to file a Schedule C (for real estate) and a Partnership (for LLC) come tax time?  I'm thinking I can, as long as I only do transactions for our flips, and nothing else. 

What say the experts? 

Thanks!

If the LLC that you are setting up for your real estate broker business is only owned by you, then it will not be treated as a partnership but will be disregarded for federal income tax purposes and the income and expenses will still be reported on Schedule C.   

[goodday,eh]

that depends on whether the state you are in is a community property state.

I'm not an Oregon tax expert, but i don't believe it's a community property state.  So, even though they are married, they will still have to file a 1065 Partnership return for an LLC that they are the only members of.   

And it sounds like they set up the LLC for real estate with both of them as members and not just her real estate licensed activity, so i wouldn't see any issues running licensing or other real estate costs through that that business.

Just an extra piece of advise that you didn't ask for.  If you expect to make any income through the flipping, then you should look at having the LLC taxed as an S corporation before it's too late. 

[Wile E. Coyote]

that depends on whether the state you are in is a community property state.

I'm not an Oregon tax expert, but i don't believe it's a community property state.  So, even though they are married, they will still have to file a 1065 Partnership return for an LLC that they are the only members of.   

And it sounds like they set up the LLC for real estate with both of them as members and not just her real estate licensed activity, so i wouldn't see any issues running licensing or other real estate costs through that that business.

Just an extra piece of advise that you didn't ask for.  If you expect to make any income through the flipping, then you should look at having the LLC taxed as an S corporation before it's too late.

Ah, I misread and thought she was setting up a separate LLC for her broker business. I would probably prefer to keep them separate from a legal perspective, but that’s a personal choice.