Filing tax returns for LLC

[12raleigh]

My wife and I own a rental property in NC and it's registered under an LLC.  How should we file tax returns for this LLC and can we use Turbo Tax Premier or do we need to purchase the Turbo Tax Home & Business?

Thank you.

[PatriciaV · Accepted solution]

Since you do not live in a community property state, the LLC must file a separate business return (available in TurboTax Business). You would then include the information from two Schedules K-1 on your joint return, which you may prepare using TurboTax Premier.

See this post for specific help: Where do I report rental activity for an LLC?

[12raleigh]

Thanks so much for your response.  I do have a follow-up question.  In your response, you referenced the need to file two K-1 schedules.  why is that?

Thank you.

[SharonD007 · Accepted solution]

You need to file a Schedule K-1 for yourself and your spouse.

[12raleigh]

Hi.  I have generated the K-1 schedule from Turbo Tax Business.  How do I incorporate the K-1 schedule into my personal tax filing?

Thanks

[PaulaM]

Enter your K-1s in your personal return by following the instructions in this link. 

[12raleigh]

Thanks so much for your response.  I think I am getting closer to the completion of the return.  There's a note in the 1065 saying that I need to file it no later than March 15 2024.  Does this mean that March 15 2024 is the deadline for me to file the return for the LLC in order for me to include the schedule K-1 in my personal return?

Thanks again.

[mgarry3416]

Yes  

Business returns for partnerships & LLC on Form 1065 are due by March 15 of each year.  This is so the partners or members get the Schedule K-1 in time to file their personal returns by April 15.  You may file an extension for the Form 1065 if needed.  You may also file an extension for your personal return.

On a separate note - you may want to ask if you need to file a separate business return if the LLC is "just you and your spouse"  You should be able to file the rental income on Schedule E as a disregarded entry and if applicable take advantage of the rental loss provision.  It may be worth your time and money to talk to a local tax professional to discuss how to file.  Please check my profile and then consider my advise.  Good-luck

[PaulaM]

Yes, Business returns are due bye 3/15/24 and K-1's distributed to the owners so that they can include on their individual returns by the April 15, 2024 due date. If you do not live in a community property state than you must file a 1065 partnership return. 

Taxpayers in community property states can file as a partnership or as a disregarded entity and the income/loss flow through a Schedule E.

See this IRS link for reference.

[12raleigh]

This rental property was just incorporated into an LLC in 2023.  In prior years, this rental was treated as our personal property and was included in our personal tax filings.  In those years, we included the rental property's depreciation value in the returns.  For 2023, now that it's an LLC, can we and how do report the depreciation value in the filings?

Thanks

[mgarry3416]

So there is no change in the depreciation.  You continue using the same schedule as before.

[AmyC]

Pub 544  offers information for property purchased from a related party. Your basis in the house is the same and you must subtract all depreciation taken to establish your LLC basis. 

The house is a new asset to the LLC so it will depreciate this new basis over the full 27.5 years of the rental property's useful life.  

Reference: Publication 946 (2023), How To Depreciate Property - IRS

[12raleigh]

In TurboTax Business, how do I complete section B of form 4562?  I need a way to enter the residential rental property depreciation deduction in section B of form 4562?

Thanks

[ThomasM125]

Section B on Form 4562 is used to report the depreciation on assets entered into service in the current year. If your rental property was put into service in a prior year, it won't show in section B, it would be reported on line 17 of Form 4562, for assets put into service in prior years. You would need to enter an asset in the asset/depreciation section you will see on the screen that says Review Your (name of company) Rental Summary: