I recently got a new client who rented 60% of their property and living in 40%.As per their 2018-2023 tax return filed under an LLC owned by the client and his spouse. Their previous tax preparer filed the rental part under a schedule C instead of form 8825 and never taken any depreciation on the rental part. Last year(2024) they sold the property. My thoughts as to the sale of the property (a) Continue filing as a partnership return, any income derived on the rental part using form 8825 which would include taking depreciation exp and recapture all depreciation not taken in the past. Any advise on handling this situation?
