Schedule E property transferred to LLC, non community property state.

[WilHen02]

We could ,and maybe should ,do a  part year "E" filing  and then another 1065 and K-1s for the time period after the transfer. This property has been non owner occupied and filed as E in a joint return since 1980. Multiple depreciation items, etc. to transfer. Seems like the long way around to get to the same tax result as treating it as a partnership only and simply treat the entire year as a partnership. It is in fact and always has been a jointly owned marital  partnership with both of us actively managing the property. 

[AliciaP1]

Yes, you should split the year based on ownership.  As soon as you transferred the property to the LLC, you changed the ownership structure.

Per the IRS:

If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership.

[WilHen02]

I was not trying to avoid filing as a partnership. Filing as a partnership for the entire year rather than 6 months as an "E" and 6 months as a partnership is what I would like to avoid. Rather just get set up for next year in one step.  A couple of joint properties went into the LLC but with different staggered cost shift time lines. A lot of hair splitting without any tax impact at all.

There is no sched "c" impact at all. The IRS guidance is aimed at SS tax splitting, not purely rental income.

From jointly held rental properties as a marital partnership to a jointly held marital LLC rental partnership.

[Rick19744]

Understand the mechanic issues.  Unfortunately, lack of planning impacted the answer here.

Also understand that there is no bottom line impact.  However, should you win the audit lottery, the IRS could assess late filing penalties for not splitting the year appropriately; not filing the form 1065.  You could possibly get those abated, however, the IRS may still require you to go back and prepare the late filed 1065 and then amend your return; which once again, will have no bottom line impact.

[WilHen02]

I will file the 1065! Stated that in each of the posts.  It is the schedule "E " that is the long road to nowhere that I wish to avoid!