But if we cannot file a consolidated return, each entity will have to file separately (on Form 1065), and the owners may not be able to take advantage of the loss due to lack of sufficient basis in that one entity.
This would mean that the owners would have to pay a lot of taxes on the profits of the other initial LLC for year 2012.
First and most important: is it illegal or unethical to now create the amendment that should have been created early on in year 2012, and to make it effective as of the first of the year (backdate it), thus making it possible to file a consolidated return?
Likewise, the same question for backdating similar amendments for the entities that were startups later on in year 2012?
If those initial two LLCs had never been split apart, the owners would not have the tax problem they now face.
At this point, is it just as impossible for us to put the two initial LLCs that were split out from the original S-corp, back into the original S-corp as if no change had been made from a tax preparation point of view?
Disordered, untimely paperwork was cited as the cause in some cases of unintentional backdating.
Initially, lax enforcement of the reporting rule was also blamed for allowing many companies to sidestep the rule adjustment that stemmed from Sarbanes-Oxley.
This process occurred when companies were only required to report the issuance of stock options to the SEC within two months of the grant date.
The holding company S-corp would have issued just two K-1s, one to the husband, and one to the wife; they are the owners of the S-corp, 50/50.
Then the results of the group of business entities, all with the same ownership, would have carried over to the Form 1040 for the husband and wife.
Was this an oversight, was it poor planning, or is there something I just don’t understand?
In fact, if no operating agreement had ever been made, am I correct in thinking that this problem would not exist?
Now at year end 2012, after the outside tax planner who created all this is out of the picture, and I have walked into the scene, I find that one of the two companies that were split from the original S-corp on 12-30-11 has a significant loss.