Rental Income and Expenses - conversion from personal to multi-member LLC

[lenushkina1]

Me and my partner bought, renovated and rented a house in 2022. Towards the end of the year, we formed a multi-member LLC and transferred the house. The LLC continued to receive rent and incur maintenance costs.

How do I go about it - report rental income/expense pre-LLC in Schedule E, and post-LLC in Form 1065 (and then K-1 to Schedule E)?

[GeorgeM777]

The default tax status for a two member LLC is a partnership.  However, a partnership, unlike an LLC, does not require a formal filing with the appropriate State agency.  Thus, two or more individuals could verbally agree to form a partnership and the resulting business is then a partnership.  

If you and your partner intended to form a partnership when you first purchased the rental property, then you could file a Form 1065 for the entire year.  The creation of the LLC was not required to form a partnership.

The decision is yours as to when you want the partnership to begin.   The partnership is a pass-through entity, and therefore, whatever approach you take, you will be reporting your rental income and expenses on Schedule E.  The reporting of your rental income would be different if you were Real Estate Professionals, in which case, the rental income and expenses would be reported on Schedule C Profit or Loss From Business.  

@lenushkina1

[Mike9241]

A partnership is the relationship between two or more persons who join to carry on a trade or business, with each person contributing money, property, labor, or skill and each expecting to share in the profits and losses of the business whether or not a formal partnership agreement is made.
The term “partnership” includes a limited partnership, LLC, syndicate, group, pool, joint venture, or other unincorporated organization, through or by which any business, financial operation, or venture is carried on, that isn't, within the meaning of regulations under section 7701, a corporation, trust, estate, or sole proprietorship.
A joint undertaking merely to share expenses isn't a partnership. Mere co-ownership of property that is maintained and leased or rented isn't a partnership. However, if the co-owners provide services to the tenants, a partnership exists.