Had a rental property in CA. Sold it, did a proper / by the book 1031 exchange to a rental property in OK. Important aspect = the capital gain from the sale rolled over to the new OK rental.
For 2 years, we reported the OK rental on our own 1040, schedule E. This year, formed an OK LLC and transferred the rental property title to it. Did it all properly, by the book, lender approved, insurance approved, etc. The LLC has an EIN; it is neither an S corp, nor a C corp; husband & wife = only members.
How do we report the new OK rental going forward?
1 - Do we remove it from our own 1040 schedule E and add it to the LLC's 1065 ? If so how do we "remove it" WITH NO TAX IMPLICATIONS?
2 - Do we list the title transfer as a "sale" in 1040 schedule E ? If so, will this trigger a tax on the original rolled-over capital gain? I want to avoid this scenario. NOTE: California wants to tax the rolled over capital gain when you *sell* the new property...
3 - Or how else do we transfer *the rolled over capital gain* along with the title to the LLC?
4 - Alternative: do we simply keep the new rental on our own 1040 schedule E? If so what would the LLC report on its 1065?
What else should we know / should be aware of? [aside of course from "ask a lawyer / ask a CPA"]
