WHAT STEPS ARE REQIRED TO SWITH FROM FILING A 1065 FORM BACK TO USING A SCH E RENTAL REAL ESTATE FORM ON THE 1040 FORM. SIMPLE LLC WITH A 2 MEMBER (SPOUSE) FORMAT.
THANKY YOU.
The IRS has this answer for you https://www.irs.gov/newsroom/closing-a-partnership
in order to convert from a multimember LLC to a single member LLC treated as a disregarded entity, your spouse will have to gift you their interest in the LLC. No gift tax return is required for spousal gifts of present interest. you take over their tax basis ang follow @ee-ea thread on filing a final partnership return.
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you will have to manually enter the rental activity into your 1040. there is no way to do a transfer.
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if your spouse remains a member you will have to continue filing partnership returns.
An LLC owned by a husband and wife, that has not made an election to be taxed as a corporation, is treated as a partnership and must file a partnership return unless the husband and wife are in a community property jurisdiction. then separate schedule Es for rental activity are filed.
Without the LLC you can do a joint venture.
https://www.irs.gov/faqs/small-business-self-employed-other-business/entities/entities
then separate schedule Es for rental activity are filed.
I know that's true for SCH C. But SCH E? I can see separate SCH E's if the couple is filing MFS. But if filing joint, then one can select the option that indicates it's owned by "both of us", and there's no need for separate SCH E forms - even in a community property state.
Don't know if it's been mentioned yet, but if on the partnership return the property was not reported on 8825 and depreciated appropriately (27.5 years for residential rental, or 39 years for non-residential rental) then the transfer to SCH E is not simple, and will require professional help. Especially if their state taxes personal income.
@Carl wrote:
then separate schedule Es for rental activity are filed.
I know that's true for SCH C. But SCH E?
Per Rev. Proc. 2002-69, it's either separate schedules or a 1065 if the married couple holds their interests as community property in the name of a state law entity (i.e., an LLC).
I think there is some confusion below.
If you dissolve the LLC, then you can file your real estate activities on form 1040, using schedule E.
If you want to maintain the LLC structure, we need to know more about where you live and whether your actives are active or passive.