@Carl wrote:
Overall, if you just report the rental income/expenses on a 1065 partnership return, your life will be significantly easier and much simpler.
I am not tracking the above-quoted statement since filing a 1065 makes life more difficult and complex.
Among other things:
* An EIN needs to be obtained for the partnership.
* An extra return needs to be prepared and filed with the IRS and that return has a due date that is a month earlier than individual income tax returns.
* K-1s need to be issued and the partners have to enter information from their K-1s into their individual income tax returns and retain their copies (until the partnership is dissolved and a final return is filed).
* The partners need to keep track of their inside and outside bases for the point at which there is a sale of their interest in the partnership or partnership property.
* Generally, compliance costs are increased as a result of all of the aforementioned.
The parties are really much better off by each entering their half on Schedule E as suggested by @Hal_Al.
