Depends on whether the LLC is a single-member LLC or not,
and if so, whether it has filed an election to be treated as
a corporation for federal tax purposes.

If the LLC is a single member LLC that has not elected
corporation status, then it is disregarded as an entity
separate from its owner, and the owner reports all of the
LLC's items of income, gain, deduction, loss or credit as
the owner's own items. As a result, the LLC would generally
not file its own federal income tax return. However, under
Notice 99-6, it has the option of reporting its employment
tax and payroll responsibilities on a separate return under
its own EIN, in which case it would file separate employment
tax returns.

If the LLC is not a disregarded entity (either because it
has multiple members or because it chose corporation
status), the content of the required return should be
determined by working through the return and reading the
accompanying instructions. Without doing that step, it
would be imprudent to file a return showing all zeros.

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Shyster1040 wrote:
- quote -

Thanks for the help. I think I need to file a return
because they have applied for and received a FIN. Will the
return contain all zero's? Based on the conversaions above,
I can not think of anything that would be depreciated or
expensed on the return. Is this correct? Do I file a
return with all zero's?

Marie L. Murrell

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- quote -

Again, grading costs into the land. Any other direct costs
associated with the bridge are land improvements and are
capitalized. However remember that depreciation doesn't
start until the business starts. So follow the secret of
success in accounting: allocate and pro rate.""

Costs of special grading that is specific to the bridge
being built, and that will necessarily be destroyed when the
bridge itself is torn down or replaced are capitalized and
depreciated over the same period as the bridge itself.
However, grading that is necessary simply to make the site
useable is generally capitalized into the cost of the land.

As an example, general clearing and flattening costs are
capitalized into the basis of the land and are
nondepreciable and nonamortizable costs; by contrast, costs
to dig a foundation trench for a building foundation are
capitalized into the cost of the foundation and depreciated
over the life of the building.

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mmurrell wrote:

Okay, I'll start things off.

- quote -

clearing and grading go into land value. (Press the EASY
button now.)

- quote -

Again, grading costs into the land. Any other direct costs
associated with the bridge are land improvements and are
capitalized. However remember that depreciation doesn't
start until the business starts. So follow the secret of
success in accounting: allocate and pro rate.

- quote -

(nor???)

- quote -

Again, capitalize. No depreciation until assets are begun to
be used.

- quote -

Let's see what others say about this one, however I'm
inclined to capitalize ALL costs, depreciation on the grader
and salaries.

- quote -

(Grin) No contest. Capitalize. The client also probably
things that if you write the checks out on Dec 31st and even
though don't deliver till January, costs are still
deductible. Right? (another grin)

The best outcome is if client has no other significant
income for 2006, and you can show that by capitalizing costs
you're saving deductions for later when he needs them.

ChEAr$,
Harlan Lunsford, EA n LA

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My client bought rough property in mid 2006. His intent is
to construct storeage buildings on the property. He has
spent a great deal of money clearing trees and grading the
property. Would all of this go toward the land, or can some
be attributed toward the building itself?

Some of his expenses include grading and engineering costs
associated with a bridge that has to be constructed to
supply access to the property. It is difficult to
differenciate between those costs associated with the land
costs, storage building costs, and the bridge costs. If we
arrive at some reasonable allocation method could we assign
some of these costs to the bridge and consider it land
improvements for 15 yrs?

The actual construction of the bridge nor the storage
buildings have begun. How do I handle those costs already
incurred in 2006 for tax purposes?

The client did buy a grader and is doing much of the work
himself, or hiring a grader operator. Would I go ahead and
file a return for his LLC and show the grader as a
depreciable business asset for 2006?.

The client hurried and paid engineering cost of $10K on
December 31. He thought at least that would be deductible.
What do you think? The engineering costs were for water
flow studies, storage building and bridge construction
information, etc.

Any help will be greatly appreciated

Marie L. Murrell

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