Tax identity for LLC

I ran a small business last year (that went defunct in 2012) as an LLC. I was the sole Manager, though I had a number of investors who were passive members. My limited understanding was that we were considered a corporation for tax purposes. However, when I filed a form 1120 this year, it came back 6 months later, saying that I was a disregarded entity and had to file an 8832 or file it under my personal tax return on Schedule C. When the company closed I indicated to my passive members that they should claim it as as capital loss under the rules for a corporation. But perhaps that was wrong



I need to file an amended return, or refile after submitting my 8832, but I was wondering which course was more proper for our situation. I don't understand the subtleties well at all. The business was fairly small and I couldn't afford an accountant, nor can I now, so I'm trying to figure it out on my own.



Thanks!

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