For federal purposes, an LLC jointly owned by husband/wife can be treated as disregarded if there are no other partners and you wouldn't need to file a 1065. However, for certain states such as NYS, the state treats husband wife LLC's as partnerships and you would need to file an IT-204 (NYS form) or other state partnership tax return and k-1s. Since the property is not in owned by LLC, the IT-204 (or other state partnership return) wouldn't actually report any of the air b&b activities on it. I would recommend having a lawyer in the state your property is held contribute it to the LLC for liability protection (which then you would need to report the state activities on a partnership return if the state required it).
I also have a similar situation but my properties are contributed to LLC's and I find it easier to file the 1065 first. (however I don't know your situation, but i did not find the 1065/k-1s on turbo tax very easy to prepare as there was a lot of manual checking and calculating on my end, and I have been working on partnerships for 10+ years. Partnership rules are also complex and i would be recommended to consult with a cpa on this).
Not sure on your schedule E question
- From a CPA
