0

On Form 1040 Schedule C - "Profit or Loss From Business (Sole Proprietorship)" , the instructions for line 23 ("taxes and licenses" under "Expenses") have a list of what taxes can and cannot be deducted as expenses. But I can't seem to find an exact match there for an annual state tax (on a disregarded-entity single-owner LLC), neither in the "you can deduct" nor in the "do not deduct" lists. (For example this annual state tax - scroll to the "LLC/Partnership Tax Information" heading.)

So can an annual tax on an LLC be deducted in Schedule C as an expense, or not?

1
  • Just to be clear, you're referring to a "fee" - they indeed name it a "tax" in that document, but for anyone reading it's a "flat fee". It's not a "state tax" as that phrase is typically used (for example, "Texas has no state tax" or "you pay 7% of your income as state income tax to the state in my state" and so on). – Fattie Feb 22 at 15:01
1

The LLC tax falls into the "you can deduct" IRS category here:

Licenses and regulatory fees for your trade or business paid each year to state or local governments.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.