What if the husband and wife reside in a community property state (CA) but they formed and operated the LLC in a non community property state(FL)? What laws prevails if they want to switch from filing a 1065 Partnership LLC to a 1040 single member LLC in which the husband now owns 100% of the the property as opposed to previously when he owned 51%? The wife signed over ownership to the husband in mid year (2013) but the LLC document with FL was not revised until early 2014. The 2012 tax return was filed as a 1065 partnership LLC and was not marked final. Part of the problem is they didn't file an Extension for 2012 and I was able to get them a one time waiver of penalties but I can't afford an error here because although they filed a timely extension for 2013, if they don't file the 1065 for 2013 I suppose the IRS could penalize them for not doing so if the husband files a Schedule 1040 E instead? The LLC is rental real estate property.
