LLC, multi member to single member

[luluche45]

My deceased husband was a member of our llc.  I filed our last multimember return for 2021.  I checked the box for the last k1 issued to him.

This year I am told I need to complete a schedule C.  That doesnt fit  a rental real estate business.  A schedule E fits that.  I do not sell any product, i simply run a real estate rental of owned property.  I am confused about the schedule C.   

[MinhT1]

Your now single-member LLC is a disregarded entity and you do not need to file form 1065. You can report all income and expenses on your personal tax return.

For your rental business, I can confirm that you will file a Schedule E, and a Schedule C (which is the case in general).

[Opus 17]

@tagteam 

I'm not sure it's as simple as filing as a single member LLC/disregarded entity.  There may be other state paperwork to file to remove your spouse as a member.  You also need to get a new EIN when you change from being a partnership to an SM LLC or sole proprietorship. 

[tagteam · Accepted solution]

I agree with @Opus 17; not so simple.

Articles of dissolution would need to be filed at the state level, in the first place, if you want to dissolve the LLC and operate under your own name.

A new EIN would be needed when a member/partner leaves and the other member/partner operates as a sole proprietorship. However, for a residential rental property it might not be absolutely necessary.

See https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein

Finally, rental income/expenses do not need to be reported on Schedule C unless the taxpayer is a real estate dealer or provides substantial services to renters.

[luluche45]

Thankyou. That is what I needed to know.  I had come to the conclusion that the schedule C didnt fit and that I had not ever done that even before the llc.  As for the LLC, every state is different in how they handle a deceased member.

[Carl]

All the things that need to be done (disolving multi-member LLC, transfering the property assets out of that multi-member LLC to the new owner, and much more) are really beyond the scope of this public user to user forum. You need to seek professional help yesterday, if not sooner. How you handle this depends on your state and the laws of that state which govern not only dissolution of a business, but the distribution of assets from that business when one of the partner's/owner's is deceased.

Please seek professional help for this, for at least the 2022 tax year.