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I have the same issue.

 

Let's assume all the income for my SMLLC comes from a multi-member LLC (K-1). I would then report the Schedule K-1 activity on Schedule E. But now, what happen to my Schedule C report? I wouldn't report anything since all income for my SMLLC was from the multi-member LLC. Wouldn't this look suspicious to the IRS? Or do I report the multi-member income in Schedule E and any expenses in Schedule C? It will be the same thing as putting all income and expenses in Schedule E, but at least my SMLLC looks like is active. I still feel like we have to put something in the Schedule E saying that the income is tied to the SMLLC. Thoughts?