schedule b-2 form 1065

Very generally, according to the form, the election is made on line 25 and schedule B-2 on form 1065. Remember not all partnerships qualify for the election.The forgoing is not intended as legal, tax or other advice. You should consult a tax professional to answer your specific questions.

Caveat: we have limited facts here, so this answer is necessarily speculative and predicated upon several simplifying assumptions. For example, I assume we are dealing with U.S. taxpayers within the territorial United States. In the absences of clarifying facts, I have not addressed possible international or SALT issues.Edit note: I noted the additional information provided in the comment to one of the answers here on this page.The key questions are “What is the economic substance of the arrangement?” and “What are the intentions of the parties?” Each question informs the other. Let’s assume your intent and your sister’s intent are aligned but there is only an informal undocumented “understanding.” There are three “simple” scenarios that could be entertained:Gift. If your sister had donative intent, the funds advanced to you from your sister are a gift. You have no obligation to pay her back, but you may form donative intent yourself if you wish to share future accretions to your wealth by making gifts to her as profits from the investment materialize over time. If the “gifts” stay under a certain annual dollar threshold ($14,000 in 2016), there are no income or gift tax consequences. You, of course, will pay income tax on the profit from the investment. If the profit from the investment has the attribute of a qualified dividend, then (under current law), preferential capital gain tax rates may apply to the dividend. (There are technical conditions for qualified dividend status to apply.) This, it seems to me, is the simplest tax position; you report the dividend and pay the tax; you make gifts to your sister from the after-tax profit in whatever amount you feel is warranted - with the understanding (between you and your sister) that there is no obligation. This keeps things simple for both of you, does not implicate your sister in the deal, mitigates any potential liability she would have as a general partner, and does not create a long-term legal entanglement.Loan. Another possibility is that you and your sister intended to create a debtor-creditor relationship with respect to the funds. In that case you and your sister should take formal measures to color the transaction as a loan. Specifically, you should give your sister your promissory note and pay her back in accordance with the terms of the note. To avoid re-characterization under the related-party rules, the terms should include a fair rate of interest based on market comparables apropos your own credit-worthiness. The interest income realized by your sister under the note (possibly including OID) will be taxable to her as ordinary income. The interest expense you incur under the note may be deductible, but the limitations on investment interest expense will probably apply.Deemed partnership. A third possibility is that you and your sister have inadvertently formed a constructive (deemed) partnership or joint venture for tax purposes because the intentions of both of you are too vague to conclude otherwise. In that case, you will treat the arrangement as such with all of the complications and consequences that entails (keep books, file partnership returns, provide K-1s to the partners (you and your sister), create a written partnership agreement with your sister setting forth profit and loss allocations, guaranteed payments, capital account adjustments, ,etc.). The mere fact that you are the owner-of-record of the stock is not determinative. You can be deemed to have contributed the stock to the deemed tax partnership if that is consistent with the apparent intentions and actions of you and your sister. Additional considerations:If the only income of the deemed partnership is the dividend from the stock, then the entire pass-through will probably retain its character as a dividend to you and your sister. In that case, it will not be subject to the self-employment tax, although the net investment income tax (Form 8960) may apply to either of you individually depending on overall tax circumstances.Under certain conditions, you and your sister may be able to avoid deemed partnership treatment by affirmatively electing under Reg. Sec. 1.761-2 to be treated as “not a partnership.” These rules are complex. Consult a paid professional.These are the three least complex scenarios. There are other more complex hybrid arrangements that are possible, but they are (way) beyond the reasonable scope of this question.

I'll try to explain this as if you've never taken an accounting class.  There are three basic financial statements.Income statement.  This measures the revenue and expenses for a given period of time.  If you have $100 in revenue and $75 in expenses, your profit is $25.Balance sheet.  This is a snapshot of the financial strength of your business as of certain point in time.  Typically financial statements are prepared on a monthly basis, so the snapshot is typically at the end of the month.  This statement measures three basic areas; assets (cash, inventory, other things of value), liabilities (what your business owes to others, i.e. unpaid bills) an equity (the net worth of your company).  The equity of your business is the amount of capital contributed, in your example, $1 million.  Equity increases as you make profits and decreases if you incur losses.  It also decreased to the extent that the owners draw profits from the companies (for non salaried reasons).Cash flow.  This is a reconciliation of your net income to the cash on hand at the end of the month.  It answers questions like, "If I made $100,000, why did my cash increase by only $5,000?  Where did it all go?"Let's start with your first question.How does a partnership divide profits?The distribution of profits to its shareholders (owners) are typically based upon their ownership in the company.  In your example, each person contributed $500K to start the company.  Since the amounts are equal, you are 50/50 partners, with each person entitled to 50% of the profit distribution.There are no hard and fast rules on distributions, with regard to how much and how often.   If you just made $100K in a given month, you could immediately distribute $50K to each partner, but there may be reasons why you might not want to do so.  Those funds may be needed to invest in other assets to expand or build your business or it may be needed to pay existing liabilities or debt repayments.  When distributions are made, they are recorded as a reduction to your equity in the opposite way that profits are an increase to equity.  From a balance sheet perspective, if you distribute the exact amount you earn, your equity will not change.It is worth noting that accounting for  distribution of profits differs from compensation, although the effect is the same (i.e. money in your pocket).  Compensation is a salary that is paid to both you and your partner, regardless of whether a profit (or loss) occurs.  In essence, you are an employee of the company.  Like all employees, monies paid for payroll expenses are recorded as an operating expense and appears on the income statement, rather than balance sheet.I hope this provides a sufficient overview, but if you have any questions, feel free to ask in the comments section of this answer.

If your general business credits exceed your tax liability limit, the credits are used in the following order and based on the order shown under Order in which credits are used next. Credits reported on line 2 of all Parts III with boxes A, B, C, and D checked. Credits reported on Part II, line 25. Non-ESBC credits reported on line 5 of all Parts III with boxes A, B, C, and D checked. ESBC credits reported on line 6 of all Parts III with box G checked. Order in which credits are used. When relevant, the components of the general business credit reported on Form 3800 arising in a single tax year are used in the following order. Investment credit (in the following order—rehabilitation credit, energy credit, qualifying advanced coal project credit, qualifying gasification project credit, and qualifying advanced energy project credit) (Form 3468). Qualifying therapeutic discovery project credit (carryforward only). Work opportunity credit (Form 5884). Biofuel producer credit (Form 6478). Credit for increasing research activities (Form 6765). Low-income housing credit (Form 8586, Part I only). Enhanced oil recovery credit (Form 8830). Disabled access credit (Form 8826). Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Empowerment zone employment credit (Form 8844). Renewal community employment credit (carryforward only). Indian employment credit (Form 8845). Employer social security and Medicare taxes paid on certain employee tips (Form 8846). Orphan drug credit (Form 8820). New markets credit (Form 8874). Credit for small employer pension plan startup costs (Form 8881). Credit for employer-provided child care facilities and services (Form 8882). Qualified railroad track maintenance credit (Form 8900). Biodiesel and renewable diesel fuels credit (Form 8864). Low sulfur diesel fuel production credit (Form 8896). Credit for oil and gas production from marginal wells (Form 8904). Distilled spirits credit (Form 8906). Nonconventional source fuel credit (carryforward only). Energy efficient home credit (Form 8908). Energy efficient appliance credit (carryfoward only). Alternative motor vehicle credit (Form 8910). Alternative fuel vehicle refueling property credit (Form 8911). Mine rescue team training credit (Form 8923). Agricultural chemicals security credit (carryforward only). Credit for employer differential wage payments (Form 8932). Carbon dioxide sequestration credit (Form 8933). Qualified plug-in electric drive motor vehicle credit (Form 8936). Qualified plug-in electric vehicle credit (carryforward only). Credit for small employer health insurance premiums (Form 8941). Employee retention credit (Form 5884-A) General credits from an electing large partnership (Schedule K-1 (Form 1065-B))Then Investment Tax credit which now has its limits:The Protecting Americans from Tax Hikes Act of 2021 has implemented the phasing out of the investment credit for wind facilities. The credit for wind facilities is reduced by 40% for facilities the construction of which begins in 2021. The Tax Cuts and Jobs Act of 2021 repealed the 10% credit for pre-1936 buildings for amounts paid or incurred after December 31, 2021. The Act retains the 20% credit for qualified rehabilitation expenditures with respect to a certified historic structure, with the modification that the qualified rehabilitation expenditures generally are allowed ratably during the 5-year period beginning in the tax year in which the qualified rehabilitated building is placed in service. See the transitional rule under Line 11 for exceptions. The Bipartisan Budget Act of 2021 has extended the investment credit for the following energy properties, the construction of which begins before January 1, 2021. Solar illumination, Qualified fuel cell, Qualified microturbine, Combined heat and power system, Qualified small wind, and Geothermal heat pump. The Act also provides for future phase-out of the investment credit for qualified fuel cell property, qualified small wind energy property, and fiber-optic solar property.Go to An official website of the United States government type in “ publication 334” on the search box

Actually I think a High speed rail from Melbourne-Sydney via Canberra would still make some sense and will benefit Australia by providing a more convenient way connecting the two major Australian cities as well as connecting small cities in between.(Forgive me for the grammatical mistake I made, I indeed have realize I am still very bad at English writing….)[1]The line 1 here on the image refer to the segment between Melbourne and Sydney.Any other options involving any cities not in the southeast coast, including Adelaide unfortunately, would not be profitable due to the long distance and the lack of passenger traffic, so I don‡ think it is going to benefit Australia much. As for trains going to Brisbane & Gold Coast, I don’t think it would be profitable but it is hard to present a proof here since I have no idea about the cities between Sydney and Brisbane/Gold Coast.To show that the HSR Phase 1 from Melbourne - Sydney make sense, let’s be practical and quantitative here, by creating a possible schedule for the HSR through analyzing the following questions.1. How many potential passengers are there?It is hard to calculate, so I will only try to find a good lower bound. Besides, it is always good to be safe enough.First consider Sydney-Melbourne.Hans Pond shows that in 2021. air route between Sydney and Melbourne only about 7 million passengers. But that exclude connecting flight. [2] shows that in fact there is 8.3 million passengers if connecting flight is included.Besides air route, there are two trains daily running from Sydney to Melbourne, but there is only 2 trains and one of them is the night train which is impossible to beat according to the experience Chinese have on Beijing-Shanghai HSR, so I will ignore them.Then consider Sydney-Canberra.Also according to [2], in 2021 it have 968,200 passengerThere are also 3 trains running from Sydney to Canberra in daylight, and it shouldn’t be ignored in calculating the true number of the potential customers. However the current XPT trains runs for 4 hours. Because that wasn’t a long time, it is very hard to know the exact percentage of the customers on XPT that will be transferred to HSR, which is what we are really interested in. So I will have to ignore this also.Then consider Canberra-Melbourne.Also according to [2], in 2021 it have 972,300 passenger.I am also going to ignore the rail factor here, since there is no daylight direct trains from Canberra to Melbourne. Had the case that there is enough passengers on rail between the two places there will be direct trains for sure.Lastly, HSR is an excellent way to connect smaller cities. But smaller cities usually have much much less passengers so I will completely ignore that until we start to bring out schedule.So, we have total 8300k from Sydney - Melbourne, 972k from Canberra to Melbourne, 968k from Sydney to Canberra.2. What’s the travel time?The image above says in Australian Government's plan, 2h 44min from Melbourne to Sydney and 1h 04min from Sydney to Canberra. My guess for how long Melbourne-Canberra would take would be around 2h05min given by the distance form the triangle area to Canberra. All above data could be assumed to be non-stop.So, if a train goes from Melbourne to Sydney via Canberra, it would be 2h05 + 1h04 + 11 minutes time for reverse out = 3h20 min.3. How many potential customers can be transferred to HSR?Someone [3] invent a formula for this:[math]s = \frac{1}{ 0.031 \times 1.0168^t + 1}[/math]where t is the time in minutes and s is the fraction of rail market share.Couple of interesting values related here:2h 44min = 164min, [math]s = 67.7%[/math]3h 20min = 200min, [math]s = 53.5%[/math]2h 05min = 125min, [math]s = 80.0%[/math]64min, [math]s = 91.7%[/math]The formula, however, comes with terms and conditions and shouldn’t be always misuse. Obviously if the HSR price is insane no one would ever think of taking it. And it have to be convenient enough. Both of them require the HSR to be frequent enough.4. Possible ScheduleAssume the rolling stock is the 8 car set N700 Shinkansen used in the Sakura and Mizuho service of Japanese Shinkansen. 546 seat is offered on it.Service A: Melbourne-Shepparton-Albury Wodonga-Wagga Wagga-Canberra-Southern Highlands-SydneyThis is the route where it will make all stop along all station in its route. As most cities in between are very small, 1 train per day should be good enough. It should have a high load ratio, though, as some cities are very close to the large termial of Melbourne and Sydney, and some cities like Shepparton doesn’t even have scheduled flight.Service B: Melbourne-SydneyThis route take 2h 44min.We have [math]\frac{8300k * 67.7%%}{365 * 2} = 7697 [/math] and [math]\frac{8300k * 53.5% }{365 * 2} = 6082[/math]. This implies that there are 6082 passengers daily per direction are willing to take the long times Service C when travelling between Sydney and Melbourne and 1615 are only willing to accept service B. This can be further distinguished by price difference, departure time, and availability of seats.If we make this service bi-hourly between 7 AM - 9 PM, with three extra service at rush hour, we could have 10 departure per day per direction, transferring 5460 passengers daily per directions between the two cities. Bi-hourly should be frequent enough consider the fact that this provide a “subset” of the stations in Service C.Service C: Melbourne-Canberra-SydneyWe have [math]\frac{927k * 67.7%%}{365 * 2} = 1065 [/math] and [math]\frac{968k * 53.5%%}{365 * 2} = 1215[/math].The busies corridor will be Canberra-Sydney, in together with the passenger going to Melbourne we need to transit 8912 passenger daily per direction.This service is designed to accept part of the travelers between Melbourne and Canberra and Canberra and Sydney.Again, we make this service bi-hourly between 7 AM - 9 PM, with three extra service at rush hour, we could have 10 departure per day per direction, transferring 5460 passengers daily per directions.It is again frequent enough for those from Melbourne to Sydney as they could always choose Service B if they really want to choose a good departure time. It is also acceptable for those going to Canberra.The load ratio is also pretty good as can be seen from our calculation. Between Sydney and Canberra the average of Service B/C will have a load ratio 81.6% while it is 80.2% between Canberra and Melbourne. Average 80% is normally good enough, consider the fact the load factor for planes between Melbourne and Sydney is exactly around 80% yearly [2].5. ConclusionThe Line 1 part of the Australian HSR could support a schedule that have 21 trains departure per day per direction between Sydney and Melbourne. This is, although not good, still acceptable for a high speed railways project.[1] http://www.infrastructure.gov.au...[2] http://www.bitre.gov.au/publicat...[3]http://web.archive.org/web/20120...

Your understanding is correct. The LLC will file a return showing you as foreign owners. The problem is that the LLC is U.S. based, and thus the income appears to be U.S. based, and so even though you are non resident aliens, you have U.S. based income. Thus, I believe that you will be required to pay US income tax, even though you may have done the work overseas.You can probably find a CPA who will argue that no, the services were rendered offshore and thus the income is not subject to U.S. tax. If you pay tax on this income in your home country, that strengthens this position.Frankly, I think the IRS will take the position that the LLC is US based for a reason, and that the income was intended, as a result to be US based ( they are having a tough time dealing with services rendered over the internet, and haven’t quite decided how to tax it yet). If you use the territorial exclusion in your home country and don’t pay tax on the income in your home country, then I think you are giving a green light to the IRS position.As you can see, this is not a settled area of tax law.

The tax form you use depends upon the tax for your have chosen for your LLC. Limited Liability Companies are chameleons for tax purposes. An LLC is essentially a legal form intended to protect the owner’s personal assets from unforeseen liabilities and risks of loss.There are default forms, however, based on ownership. If you are a single member LLC and are an individual, as opposed to an entity, the default tax form is a “disregarded entity” - that is the income and expenses will be reported on the individual owner’s Form 1040, via Schedule C. If the LLC is owned by multiple individuals, it will be reported on Form 1065 as a Partnership. Finally, if the owner is a corporation, then the default form is a Corporation, reported on Form 1120.However, you may also elect to report income as an S Corporation and other tax forms, as well. You should consult with a tax professional (CPA or business attorney), before making any tax decision as to what form your LLC should take.

This boils down to the difference between an above-the-line vs below-the-line impact or deduction. In some cases there may be no difference; but in many cases there may be.In general, you should prefer to claim legitimate expenses above-the-line if you can. If there is a legitimate business purpose for the expense, you should always opt to use it as such. "Above-the-line"Anything that is used as an input to calculate your Adjusted Gross Income (Line 37) is considered "above-the-line". This includes all income found on lines 7-21 on Form 1040, including Schedule C (or 1065 Partnership) business income, plus certain "adjustments" found on lines 23-35 of Form 1040.Specifically, Sole Proprietorship, LLC and S-Corp income flow through to your 1040 on Line 12 (S-corps flow through to Line 14). Why should you care about this?1. Lower (non-passive) business income (from this $2k deduction) means you will have the lowest taxable income. Taking the $2k deduction as a legitimate (and defensible) business expense means your specific deduction is not subject to:a. The itemized deduction minimum threshold. If you claim this deduction as a charitable contribution, deductible on Schedule A, you must have at least $6100 in other total itemized deductions to receive the full tax benefit.  Itemized deductions include state and local income taxes (or sales taxes), mortgage interest, property taxes, and others.  If you only have $2k of state income taxes and zero other itemized deductions, your total itemized deductions will only be $4100, and since the standard deduction is $6100, you would receive zero tax benefit. given that your income in the question is $72k, your state and local income tax burden is unlikely to be more than $6100 (maybe if in NYC or CA).  Either way, this outcome creates an "unknown outcome" for you until the end of the year; as a tax professional who pushes proactive tax planning, I hate unknowns and beat them with a stick.b. AMT. Let's say you have $20k of other itemized deductions.  Most people don't realize that AMT forces you to pay a minimum amount of federal income tax, even if you have a ton of itemized deductions. Now there are income exemptions to AMT, etc.. but in general, putting something as an itemized deduction puts that deduction at risk of being giving you the full deduction benefit if you are subject to AMT.  At $72k gross income, it's incredibly unlikely you are subject to AMT. But this is something to consider once you make $100k+.c. Deduction phase-out for higher income earners. While this doesn't directly apply to you with your $72k of income, as you earn above certain thresholds (~$150k as you can see on Line 29 of Schedule A), your deductions may be limited. Something to consider in the future. To sum a,b and c up - you need to have at least $6100 in other itemized deductions, but not so much that you are subject to AMT or itemized deduction phaseout.2. Lower business income means lower AGI. If you are not subject to passive activity limitations, lower business income means you reduce your Adjusted Gross Income  (and business losses can actually offset other income you may have like W-2 income). AGI (and MAGI) is important because it affects your eligibility for certain adjustments (like student loan interest or using up to $25k of passive losses from rental property to offset other non-passive income), which can be "phased out"at higher income levels.3. Depending on what state you live in, lower AGI may mean lower state income tax.Bottom line: in your exact circumstance with no information other than what you have int eh question, there may be zero difference between claiming the $2k as an itemized deduction on schedule A (via charitable contribution), assuming your other itemized deductions are at least $6100, and spending the $2k on business-related (make sure the expense doesn't need to be capitalized / depreciated over several years like new durable equipment).However, to take something away from this, I can say with confidence that regardless of the rest of your circumstances that we don't know, spending the $2k on legitimate (and defensible) business expenses will get you at least the best outcome and no worse. Claiming it as an itemized deduction may have the same monetary outcome this year, but may not get you the same tax benefit in the future as your tax circumstances fluctuate.-D