My husband and I are residents of TX. In 2023 we acquired a rental property in TX. Because it would take a long time to open a TX, LLC, we used an online service to open WY, LLC in one day and closed the property into WY, LLC paying cash for it. So WY, LLC is the property owner, it has EIN, but has no bank accounts and it did not do any business in TX, received no income and had no expenses.
The property was managed under our TX, LLC, which is not related to our WY, LLC that holds the rental property. The property was leased right away, the lease is under TX, LLC name, which has a bank account, received all rents and paid for all expenses: taxes, insurance, HOA, repairs, etc. The expenses exceeded the rent, so with amortization we would report a loss on tax return.
I think we will file 1065 partnership return for WY, LLC, as the state is not considered community property state, so WY, LLC can not be a disregarded entity. Therefore property acquisition and depreciation will we reported on 1065.
Question: Where do we report income and expenses from business rental activity. Does it go on 1065 of WY, LLC even though it did not have a bank account, or should we just report it on 1040, as our TX,LL that operates the property is considered a disregarded entity for tax purposes in a community property state? All the rest of our properties' rental activities are reported on Sch E, 1040, but we can not really do that for the property that is owned by WY, LLC at it requires a partnership return 1065.
