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Tax Questions

infiniteclicksinfiniteclicks subscriber Posts: 1
Hello all. I am currently in the process of starting a new small business in the southeast region of Alabama. It is going to be a portable photo booth. I have purchased the booth already (just waiting for it to arrive). My self and my sister in law had been toying around with the idea, then I just went for it and bought the booth. Well, I am financing it. Ok, to my issue.

The booth financing is in my name only. My sister in law has registered for our tax id number and gotten that. She registered it as a 'partnership', does that matter if when I financed to booth I listed my self as the only one?

Next. The tax id number is in her name, she did not list me at all. I know nothing about filing taxes on all of this at the end of the year BUT I do know that if we show a loss we should actually get money back. If she is the one listed on the tax id number does that mean she will have to be the one to file it with her taxes? Next question, she has student loans that she is delinquent on. Like bad delinquent, she had to stop school for health and cant really work. She is paying just not the one thousand they want each month. If we do get anything back could that be held if her name is on the tax id? Would it be better to just put it all in my name?

Comments

  • LBPCLBPC subscriber Posts: 0
    Hi InfiniteClicks,
    1. If you sister-in-law registerd the EIN/tax id as a partnership, then the IRS will most likely want you to file a form 1065 (Partnership return)This return shows the income and expenses of the business, and then it divides the profit between the partners. After dividing up the profits or losses, the partnership issues a Schedule K-1 to both of you with your respective share of the profits/losses. The parthership itself does not pay federal income taxes, but you will have to include your share of the profits on your personal return.
    2. Even though you listed yourself when you financed the booth, you purchased it for business purposes. Basically this is your contribution to starting the business. You can't always deduct fixed assets in the year you purchased, so it will have to be depreciated (deducted over time)
    It would be in your benefit to consult with a CPA, whom you can talk to, and explain your detailed situation. CPAs are easier to talk to during the year, as they have more free time. Tax season is not the time to do this, and also, after the end of the year there is not much you can change retroactively
  • nganhangnganhang subscriber Posts: 20
    sorry for interupting u guys.. but may i know what tax is u guys talking about?
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