Rental Property Conversion to LLC

[Lee8]

Hello - I converted a rental property from personal ownership into an LLC this year.  It has a number of depreciable assets (appliances, etc.) that are 2-3 years in service, and about a $26K passive loss carry forward.  How do I convert the rental property in Turbotax from personal rental to LLC?  There appears to be a place to show the $26K passive loss carry forward on the new business screen, but all options on depreciation are for a newly purchased asset which would start the depreciation clock over again.  It has a separate EIN, so doesn't seem appropriate to keep it in the "Rental" category.

[Critter]

Is this a single member LLC ?   Did you make the corporation election ?

[Lee8]

Yes, single member.  It's the default "disregarded entity" - no corporation election.

[Critter · Accepted solution]

Well then guess what ... since it is a disregarded entity you don't have to change anything ... it will be reported on the Sch E of your personal tax return just like normal.  That new EIN is connected to your SS# and the IRS will expect it to be on your personal return.

[Lee8]

Thanks Critter#2, that makes it easy

[Katy]

Is the answer the same if it is a 2 member LLC??

[Critter]

Only if the 2 members are spouses ... otherwise you started a partnership or incorporated both of which you would have indicated when you got the EIN for the LLC.

[Katy]

Thanks.   Does that mean the depreciation started over?  i.e. a new 27.5 period?  or can I continue the same depreciation schedule?

[Critter]

New assets to the partnership requires a new depreciation schedule using the adjusted basis of the converted property .... this is not an easy situation and I highly recommend you put the partnership 1065 on extension and seek local  professional assistance to get this set up correctly and be educated on the return prep and bookkeeping needed.

[shubhron]

Hi, Where did you put the 26K Passive loss carryforward in Business TurboTax?