I created a Partnered LLC with brother in NY last year, but after having a baby, he opted out of being active in the business. I did 1/2 1099 freelance gigs, 1/2 LLC freelance gigs (but 100% of LLC work was done by and payed to me).
Now realizing how much of a nightmare 1065/partnered LLC's are, I'm seeing if there's any way to retroactively change the operating agreement/forms so I only need to file as a single member LLC?
Otherwise it seems like the cleanest option might be to file a first, and last year 1065 for 2025, then just act as a single member LLC under the same EIN going forwards?
I've been pulling my hair out for weeks over this, and because its a partnered LLC, no CPA will touch it for under a thousand dollars. Any help is extremely grateful!!
Partnered LLC –> Single Member LLC?
byu/Revolutionary_Clue91 intax
Posted by Revolutionary_Clue91
2 Comments
Your brother can dispose of his interest in the partnership (there is no such thing as a partnered LLC. It’s just a partnership). The partnership would cease to exist as of the date of the disposition, so you would file a final partnership return and then report the activity on Schedule C going forward.
There are potential tax consequences based on how he disposes of the interest (whether it is sold to you, etc.)
Just realize that you can’t be a SMLLC and also have your brother remain an owner.
You can report your income and expenses on Schedule C for 2025. Provide your brother with the info he needs to report his share (if any) of income and expenses, and confirm that he actually does it. Then, you probably qualify to use [Rev Proc 84-35](https://bradfordtaxinstitute.com/Endnotes/Rev_Proc_84-35.pdf) to establish reasonable cause to waive the penalty for failing to file Form 1065 for 2025. Take care of formalities to remove your bro (in 2025) from the LLC, then Form 1065 is no longer an option for 2026. You might need an attorney for that last part.