How to report capital gains for a single member LLC - individual or Schedule C?

Your LLC's tax treatment depends on how you've set it up with the IRS. Since you mentioned it's a single-member LLC, it's likely treated as a "disregarded entity" for tax purposes by default, unless you've elected to be taxed as a corporation. For a disregarded entity (the default for single-member LLCs), your capital gains from stock trades would be reported on your personal tax return, not on Schedule C. You'd report these on Schedule D and Form 8949, just as you would report personal investment gains. The income "passes through" the LLC to you personally. Schedule C is specifically for business income and expenses from self-employment or sole proprietorships - like if your LLC was selling products or services. Investment activity, even if done through an LLC, generally doesn't go on Schedule C.

I was in literally the same boat last year! My account quit with no notice and I was stuck trying to figure out my LLC taxes. I tried several online forums and got conflicting advice until I found this AI tax assistant at https://taxr.ai that helped me sort through my 1099-B forms and figure out exactly where to report everything. It analyzed my LLC structure and confirmed I was a disregarded entity, then guided me through reporting the capital gains on my personal return instead of Schedule C. Saved me hours of confusion and probably prevented some costly mistakes too.

Following up on my question about taxr.ai - I actually tried it for my S-Corp situation and it was super helpful! It immediately recognized my LLC was taxed as an S-Corp based on my docs and gave me completely different guidance than what was mentioned for disregarded entities. It showed me that my capital gains needed to go on my 1120S and flow through to my K-1, not directly on my personal return. I wouldn't have caught that otherwise! Definitely saved me from a potential audit headache.

If you're stuck and need to talk to an actual IRS agent about your LLC capital gains issue (I needed to last year), try https://claimyr.com - they got me connected to an IRS representative in about 15 minutes when I had been trying for DAYS. There's a video showing how it works: https://youtu.be/_kiP6q8DX5c My issue was that I had both personal capital gains AND LLC capital gains from the same brokerage, and I needed clarification on how to separate them properly. The IRS agent walked me through exactly how to handle both on my return.

I stand completely corrected about Claimyr. I tried it yesterday out of desperation after getting disconnected twice trying to reach the IRS myself about my LLC capital gains question. Got connected to a surprisingly helpful agent in about 20 minutes. The agent confirmed what others here said - since my single-member LLC is a disregarded entity, the capital gains go on my personal return using Schedule D and Form 8949. They also explained I needed to keep my business assets and personal investment assets separate even though they're taxed similarly. Would've taken me days to get this info without the service.

Sorry if this is a dumb question but why would anyone even hold investments in an LLC if they're just going to be taxed on your personal return anyway? What's the advantage?

I actually spoke with two CPAs about this exact situation for my real estate investment LLC. For a single-member LLC (disregarded entity), you report all gains on your personal Schedule D with Form 8949, NOT on Schedule C. However, if you elected to be taxed as a corporation, the reporting would be completely different. Without that election, the IRS essentially ignores the LLC for tax purposes, and you report everything as if you personally owned the investments.

That's great that you got it sorted out! Just want to add one important note for anyone else reading this - make sure you're keeping detailed records of which trades were made through your LLC versus any personal investment accounts you might have. Even though they're reported on the same Schedule D, you'll want to be able to distinguish them if the IRS ever asks questions. Also, since your LLC is a disregarded entity, you might want to consider whether you need to make quarterly estimated tax payments for next year if these capital gains are substantial. The IRS expects you to pay taxes throughout the year, not just at filing time, especially if you owe more than $1,000. Good luck with the rest of your filing!

Just wanted to add another perspective as someone who dealt with this same issue last year. Even though your LLC capital gains go on your personal Schedule D as a disregarded entity, don't forget about state tax implications! Some states treat LLC investments differently than federal tax law. In my case, my state required me to file a separate LLC information return even though the LLC was disregarded for federal purposes. The capital gains still flowed through to my personal state return, but I had to report the LLC's activity separately. I'd recommend checking your state's specific requirements - each state handles disregarded entities differently. Some states don't recognize the federal disregarded entity election and may require separate filings or have different reporting requirements. FreeTaxUSA should handle most of this automatically, but it's worth double-checking your state's rules to make sure you're not missing any required filings. The last thing you want is to get a notice from your state tax department after thinking you're all done!

Great thread everyone! I just wanted to add something that helped me when I was in a similar situation with my single-member LLC. Since you mentioned using FreeTaxUSA, one thing to watch out for is making sure you're entering the correct "payer" information from your 1099-B. Even though your brokerage account is in your LLC's name and the 1099-B shows your LLC's EIN, when you report these capital gains on your personal Schedule D, you'll want to make sure the software correctly attributes them to you personally (using your SSN) rather than treating them as separate entity income. I made this mistake initially and it created a mismatch that delayed my refund. The IRS computers expect to see the 1099-B income reported under your SSN since you're the ultimate taxpayer for a disregarded entity, even though the 1099-B itself shows the LLC's EIN. Most tax software handles this automatically, but it's worth double-checking that section to make sure everything matches up correctly. You might see a warning or notice in the software if there's a mismatch - don't ignore those! Also, since this was your first year with capital gains through your LLC, you might want to consider setting aside money for next year's estimated taxes if you plan to continue trading. Capital gains can create a bigger tax bill than you expect, especially if you had significant short-term gains taxed at ordinary income rates.

One thing I haven't seen mentioned yet is the importance of keeping your LLC's investment activities clearly documented and separate from any personal trading you might do. Even though both end up on your personal Schedule D for a disregarded entity, you'll want to maintain clear records showing which transactions were made through the LLC versus any personal accounts. This becomes especially important if you have both LLC and personal investment accounts with the same brokerage. I'd recommend using separate brokerages if possible, or at minimum keeping very detailed records that clearly identify the source of each transaction. If you ever get audited, the IRS will want to see that you maintained proper separation between your business and personal activities, even though they're taxed the same way. Also, since you mentioned your accountant disappeared, you might want to consider finding a new CPA before next year's tax season starts. Having professional guidance becomes even more valuable as your LLC grows or if you start generating more complex investment income. The peace of mind is worth the cost, especially when dealing with business entity taxation rules that can change or have nuances you might miss filing on your own.

One additional consideration I haven't seen mentioned yet is the potential impact on your LLC's operating agreement if you're doing significant investment activity. While the tax treatment for a disregarded entity is straightforward (everything flows to your personal return), you'll want to make sure your operating agreement properly addresses investment activities if that wasn't originally contemplated when you formed the LLC. Some operating agreements are written very narrowly and might not explicitly allow for investment activities beyond the LLC's primary business purpose. If you plan to continue trading through the LLC, it's worth having an attorney review your operating agreement to ensure it gives you the authority to engage in investment activities and that any liability protections you're seeking are properly structured. Also, depending on the volume and frequency of your trading, you might want to consider whether you need to register for any additional business licenses or comply with securities regulations in your state. Most casual investing doesn't trigger these requirements, but if you're doing substantial trading activity through a business entity, there could be additional compliance considerations beyond just the tax reporting we've been discussing. Better to address these structural issues now while your investment activity is relatively new rather than trying to fix them later if your trading becomes more substantial or complex!