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Moana Hale
Level 1

How do I file a 1065 Return for a LLC that I inherited from single-member LLC and I changed it to a multi-member LLC?

I need guidance on filing a new 1065 Return in Turbo Tax Business.
My mother passes away in Dec 2020. She owned rental property in a LLC. It was a single-member; member-managed LLC treated as a disregarded entity. Her returns were filed as 1040's. The sole member was her Revocable Trust with herself as the trustee. Her operating agreement stated that the LLC may continue upon her death. I am the sole heir, trustee and executor. I wish to continue the LLC exactly as is, but as multi-member; member-managed with my husband (50/50). I changed the LLC to multi-member at the State level (Florida) with new Articles of Organization and at the Federal level with Forms 8832 and 8822-B.
My questions are regarding filing the 1065 Return:
#1- Do I show the "Date Business Started" as the original date the LLC was filed with the State of Florida several years ago or the December date of death which started the new partnership?
#2- Do I check "Initial Return", short year (just for Dec 2020) and show only my husband and myself as Members with the new stepped-up cost basis on assets as leave it as that?
#3- Or do I need to add my mother as "Disregarded Entity" Member who left the LLC during 2020;  make a 754 Election for the Step-up basis and show a transfer of assets from her and transfer to my husband and myself?

I don't see anywhere on IRS.gov that I need to create a new EIN and restart the business due to an inherited business. I do not want to change EIN's because I don't believe I'll be able to use the same LLC name. 

Thanks so much,
Mary M.

1 Best answer

Accepted Solutions
JeffreyR77
Expert Alumni

How do I file a 1065 Return for a LLC that I inherited from single-member LLC and I changed it to a multi-member LLC?

You have done exactly what you should have to transition the sole member to a multi-member. 

 

You should check the 'Initial Return' box as it is the initial return of the multi-member LLC. 

 

As the property is deeded to the LLC, you can look into the tax advantages of being taxed as an S-Corporation as well.  

View solution in original post

4 Replies
martinmarks1919
Level 9

How do I file a 1065 Return for a LLC that I inherited from single-member LLC and I changed it to a multi-member LLC?

You formed an new LLC so the date you started was the date you organized the new one. 

Check the initial return box because this is a new LLC. The basis of the assets are what YOU contributed to the LLC.....they got a stepped up basis on the death of your mother but you then contributed them to a newly organized LLC. Personally I'd get a new LLC and you should get legal and tax pros for this.

Moana Hale
Level 1

How do I file a 1065 Return for a LLC that I inherited from single-member LLC and I changed it to a multi-member LLC?

@martinmarks1919 

To clarify, I didn't start a new LLC. I'm continuing the same one , using the same EIN#, same address, etc. The Operational Agreement states that I'm able to do so. All I'm just changing are the members and the classification for tax purposes to a partnership from a disregarded entity.  The rental property is deeded to the LLC so I'd prefer not starting a new LLC. 

 

JeffreyR77
Expert Alumni

How do I file a 1065 Return for a LLC that I inherited from single-member LLC and I changed it to a multi-member LLC?

You have done exactly what you should have to transition the sole member to a multi-member. 

 

You should check the 'Initial Return' box as it is the initial return of the multi-member LLC. 

 

As the property is deeded to the LLC, you can look into the tax advantages of being taxed as an S-Corporation as well.  

View solution in original post

Moana Hale
Level 1

How do I file a 1065 Return for a LLC that I inherited from single-member LLC and I changed it to a multi-member LLC?

Thank you, much appreciated. 

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