My two siblings and I inherited a small commercial property from our mother. The property has a triple net lease, so it requires no active management. I have set up an LLC to hold the property. Now I am completing the online request for an EIN, and the tax organization selection section says the following:
"An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits. However, a joint undertaking merely to share expenses is not a partnership. For example, co-ownership of property maintained and rented or leased is not a partnership unless the co-owners provide services to the tenants."
So it says that it is not a partnership, but I can't find any further information on the correct classification for this scenario. Can anyone point me to instructions regarding the correct tax classification for a multi-member LLC whose only activity is ownership of a commercial property with lease income and no services provided to the tenant? Thank you!
