Rental property

[skyes]

We used TurboTax for our rental property from 2013 thru 2020 when we put it in an LLC.  We’ve used an accountant but we’re now dissolving the LLC  (2022) and wish to go back to using TurboTax for next year.  The only option we see is “first year rented” but it’s been a rental for 9 years.  How can we get around this?

[tagteam]

Can you elaborate?

Who is "we", where do you reside, and where is the rental property located?

[skyes]

My husband and I, Florida, New Jersey.

[Carl]

Nothing changes really. Assuming you and your spouse were the only owners of the multi-member LLC, and assuming you will be filing a joint return for 2022, you will enter the property in TurboTax using all the original information, to include the original in-service date for all assets, including any assets already completely depreciated, cost basis of each asset, prior depreciation already taken on each asset, etc.

Now you'll be reporting a "final K-1" for each of you, up to the date of dissolution of the LLC, which I assume will be some time in 2022. So you'll end up with data on both pages of the SCH E.  Page 2 will contain the data from the final K-1's you'll each be issued by the LLC, and page 1 will have all your information on the rental starting one day after the LLC is dissolved. 

Assuming no assets are changed, the total depreciation taken on the rental for 2022 between the final 1065 and page 1 of the SCH E will match the total taken in 2021 on the 1065.

Just remember, on the final 1065 you will show the property and all assets as "removed for personal use" on the date of dissolution.  Then when you enter the assets on the SCH E using the original in service dates, the only thing you'll change will be the "prior years depreciation" already taken, so that the total will include the 2022 depreciation taken on the 1065 up to the date of dissolution when you removed the property from service in the LLC.

[tagteam · Accepted solution]

Has your accountant been filing a Form 1065 for your LLC (with you and your husband receiving K-1s)?

Otherwise, how has this been handled since 2020?

[tagteam]

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See https://www.thetaxadviser.com/issues/2016/jun/liquidation-of-llc.html

The LLC (with a default classification of a partnership) is liquidating.

[skyes]

They handled LLC and personal taxes so I figured they did the 1065 and I know they did the K1s.

[tagteam · Accepted solution]

Frankly, you should consider using the same accountant to prepare the final 1065 (and K-1s) and your personal income tax return for the 2022 tax year. 

Otherwise, you will need a copy of TurboTax Business (to prepare the final 1065) and also a copy of a TurboTax personal income tax preparation product to do your 1040.

[skyes]

Exactly what I’m going to do.  Be back to TurboTax in 2023.  Thanks!