@Critter-3 your question is so logical, intelligent and insightful. Thanks for that.
Setting up the partnership / LLC and letting it own the rental(s) is - as you know - a defensive move. We listened to lots of legal advice explaining the pros and cons = protecting our personal assets and the kids' inheritance from unreasonable tenant lawsuits, greedy lawyers, etc. etc. etc. Disclaimer! I am not bashing all layers, have some in my own family and love them to pieces. That said, the extra once a year effort and cost to file partnership taxes seems worth it. We consider it the cost of insurance against potential huge postulated losses... like the cost of earthquake insurance...
With all the legal process already in the past, we are now only looking at the right way to satisfy the feds and state tax people...
