Kimberly K Posted October 6, 2011 Report Share Posted October 6, 2011 This is my first llc filing as a partnership, I am getting hung up on the filing of the rct of the capital stock. The company started in July and provided equipment towards the llc & shows that on the membership agree>Since that time the company has provided services for the community and is gaining repeat customers. The membership agreement shows a starting date of july 2011 to july 2023. My question is, does Pennysylvania want the RCT from july or from todays date? Any HELP is greatly appreciated! Quote Link to comment Share on other sites More sharing options...
rfassett Posted October 6, 2011 Report Share Posted October 6, 2011 I am a little confused by your statement of facts, but I'll give it a shot. The RCT 101 is an annual report due 3 and 1/2 months after the end of the tax year. So for a calendar year taxpayer the due date is April 15th. The State department in PA does communicate with the Revenue department and Revenue will be looking for a return with the beginning date as the actual date that the State department granted authority to operate the LLC. The corporate stock tax computation involves a convaluted calculation that takes into consideration the average of the past fives years of book income for the entity as well as the equity inside the entity. There is a threshold above which the entity becomes subject to tax and most small businesses, with proper planning, will stay below that threshhold. A problem with startups in the middle of the year originates because the first year's book income has to be annualized. And that can send the entity over the threshold in a hurry. And that annualized calculation stays around for five years until it falls out of the five year look back window. Hope that helps! Quote Link to comment Share on other sites More sharing options...
Kimberly K Posted October 12, 2011 Author Report Share Posted October 12, 2011 Thanks....I know that it is due 3 1/2 after the end of the year, what I do not understand, is why they want this when the business is just starting. So with the corporate stock, there would only be the equipment because there is no book income for the past 5 years. Am I on the right track? Thank you so much, I am thinking maybe I shouldn't have taken this one on( But I didnt completely accept the job yet, but I thought it was the perfect opportunity to learn LLCs/Partnerships). I bought the courses on NATP website for LLCs and Partnerships, but I am basically skimming so I can complete this form for right now. Quote Link to comment Share on other sites More sharing options...
rfassett Posted October 12, 2011 Report Share Posted October 12, 2011 You are close. The book income is used for the period within which the business has existed upto the last five years. So your dividing factor for the first year is .504 (assuming the authority grant date is July 1). Note - the date stamped on the "articles of incorporation" (yes, I know it is an LLC) is the driving date. Whatever is written in the membership agreement is immaterial. If you do not have the document from the State Department granting authority to operate, you need to request it from your client. It is a big deal to have the correct date. I have seen the capital stock tax sway hundreds of dollars by the date being off just a couple of days. Now, going back to our example. Your second year dividing factor will be 1.504, the third 2.504, the fourh 3.504, the fifth 4.504, and the sixth 5.0. Notice all of those .504's in there? That is why they want you to file now. Trust me, if your client is profitable in, say, the fourth year, they would much rather have a divisor of 4 than 3.504 - but it ain't happening because that start date pesters you for five years. 1 Quote Link to comment Share on other sites More sharing options...
Kimberly K Posted October 12, 2011 Author Report Share Posted October 12, 2011 :) :) Thank you for helping me get started on this, you don't know how much I appreciate it! Quote Link to comment Share on other sites More sharing options...
Kimberly K Posted October 12, 2011 Author Report Share Posted October 12, 2011 Ok from what I read the articles of corporation is filed and then the state sends back "Certificate of Organization". She sent me one page of the cert. of org with it stamped at the bottom of August 11th. So the dividing factor is .616 and next year 1.616, then 2.616 and so on........correct? Quote Link to comment Share on other sites More sharing options...
rfassett Posted October 12, 2011 Report Share Posted October 12, 2011 I'm sorry, I obviously misled you with my example right in the middle of the year. Your divisor with an August 11th date (143 days left in the year) is .392. Quote Link to comment Share on other sites More sharing options...
Kimberly K Posted October 12, 2011 Author Report Share Posted October 12, 2011 no my mistake......thanks Quote Link to comment Share on other sites More sharing options...
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