Question for those ATX guru's

[ILLMAS]

I have a client that recently setup an LLC for his properties, this was advised by his attorneys for trust purposes, I finally received the paper work when the LLC was setup, here is my question: The properties are currently under Sch E., can I just create a copy of his tax return, import Form 1065 and move the assets to form 8825 instead of re-entering all the assets? Or do I have to start from scratch?

[Jack from Ohio]

Sorry, can't import a return or part of a return to another.

You must open the 1065 return as a brand new return.

Copy and Paste will work with two returns open at the same time.

Gotta start all over my friend.

[cpabsd]

I did this very thing this year. Copy the personal return. Delete everything but the Fixed Assets. Add a Form 1065. The assets and prior depreciation are all there. In my case, a section 351 transfer was required. It is a way to save a lot of data entry time.

[mcb39]

First of all, is it an LLC Partnership or an LLC sole proprietor? If a sole proprietor, doesn't it stay on the Sch E as part of the 1040 return. I have one with a husband/wife LLC owning the rentals and that is the way that I report it and have for years.

[michaelmars]

a single member llc will stay on the sch e. as for the other suggestion of deleting the signature page [1040] and bringing in the 1065. that used to work but I can't answer for any year post 2011

[ILLMAS]

This wil be husband and wife LLC, but here is more information I found out today. The TP's attorney set up the LLC's in this order:

The XYZ Real Estate LLC - Main one - Federal number was applied for

1234 State St LLC - Property address of TP personal residence

1238 State St LLC - Rental property located on the same block

1245 State St LLC - Same as above ^^

The deeds of the three properties were changed to each LLC accordingly, so what I am getting from this is that on form 8825 I will only include the two rental properties, sort like having an LLC that is reported on Sch E? Any advice on how to deal with this will be greatly appreciated.

Thanks

MAS

[Jack from Ohio]

First, a very appropriate size retainer.

[kcjenkins]

I did this very thing this year. Duplicate the personal return. Delete everything but the Fixed Assets. Add a Form 1065. The assets and prior depreciation are all there. In my case, a section 351 transfer was required. It is a way to save a lot of data entry time.

I just tested it, it still works fine.

[joanmcq]

First, a very appropriate size retainer.

I first read this as "find an appropriate sized hammer". I was wondering if it was to hit the attorney, the client or both.

[mcb39]

In WI, I can report it on the Sch E because of Community Property. Probably depends on your state.

[Pacun]

Do you kneed one Sch E for each property since each seems to be a business unit with its own LLC?

[michaelmars]

except for the personal property this is a very common set up we use all the time. here is what happens, the "parent" llc is the partnership return with 2 partners, husband and wife. If set up correctly the parent llc owns the children so they are single member llc's and you report each property on separately on 8825.

As for the personal property, when we do have this we don't treat it as rental and show the items that are allowed on schedule a such as interest and property tax as a footnote to the K-1 so the partners know they have these items to deduct.

I know some here object to this but we handle over 1000 properties mostly in llc's and have never had an issue explaining the following. When multiple properties are under one llc like you have here, we set up another building called administrative on the 8825. This is used for items that can't be allocated easily; such as the fees to set this all up, bank charges, supplies that might b e used in each building, accounting fees, etc. By doing it this way, your tbws for each property stands on its own and you don't have to do intercompany allocations and these items are generally de minimous in nature.