Using Turbo tax Home and Business desktop edition. When I started entering my Rental property information, I recall it asked if the property was under Single Member LLC (SMLLC) - at that time I answered it as "NO" even though the property is under an LLC with my spouse however, given that I live in a community property state (CA), the LLC is considered disregarded entity for federal tax. I now realize that for CA, I need to file CA-568 and for generating that, I should have answered this question as yes. However, I am not able to find where this question was and how to change my answer (I wen through each question within the rental property/Schedule E section).
Found it!
You have to go to state and visit the "Rental or Royalty adjustment" section. There it prompts you if the previously reported rental property is under and SMLLC. Answer yes and it will create CA form 568 and will fill in a few basic details (basically the reported income) but nothing else. You will have to fill the form by hand. There isn't much value Turbo tax offers here since it wouldn't e-file this form either. I might as well download the form from the ftb.ca.gov site and fill it out by hand. Disappointed.
The rules for a married couple LLC to be considered a disregarded entity in a community property state are set for in Rev. Proc. 2002-69:
(1) The business entity is wholly owned by a husband and wife as community property under the laws of a state, a foreign country, or a possession of the United States;
(2) No person other than one or both spouses would be considered an owner for federal tax purposes; and
(3) The business entity is not treated as a corporation under § 301.7701-2.
If you decide the take the foregoing route, then you would each need to file a separate schedule (Schedule E in this case) representing your interest in the property (presumably 50% each).
Thanks but tha wasn't my question. I meet all the requirements of having my LLC as disregarded entity for the tax purposes but CA still requires me to file a form 568 for the LLC. How do I create one in TT? If I declare this LLC as a business section, it generates a schedule C (not schedule E). I need TT to still treat rental property under schedule E for federal but generate a form 568 for state using the information from schedule E (rental income and expenses).
Frankly, I am not certain about the state (California), but I do know you need to create a Schedule E for each of you in the federal side of the program (i.e., two schedules).
You may have to resort to Forms Mode to prepare your 568.
Using forms mode to get CA-568 defeats the purpose of having Turbo Tax - its no different than downloading that form from the state tax website and filling it out by hand.
I am pretty sure there was a question that asked me if the real-estate is under an SMLCC. I answered NO because I thought as a disregarded entity I dont need to declare this LLC for federal tax purposes (which is correct), but now that I am doing CA taxes I realize the state still wants CA form 568. Hopefully some CA based expert can help me!
Found it!
You have to go to state and visit the "Rental or Royalty adjustment" section. There it prompts you if the previously reported rental property is under and SMLLC. Answer yes and it will create CA form 568 and will fill in a few basic details (basically the reported income) but nothing else. You will have to fill the form by hand. There isn't much value Turbo tax offers here since it wouldn't e-file this form either. I might as well download the form from the ftb.ca.gov site and fill it out by hand. Disappointed.