USA Schedule E Real Estate Property contributed to LLC

[Mike D]

Have a new client that thought it would be a great idea to move 2 rental income properties into 2 1065s. She & husband thinks they'll have legal protect with the LLCs, so it has to be a great idea to put them into separate 1065s (they are not in a community property state). I think it's nuts this was even suggest to them, let alone the SE tax that will now kick in.

They have a ton of prior depreciation and I'm using ProSeries which I can't seem to find a way to move assets so that the partnership has the basis of the contributors & not trigger a gain on schedule E.

 

[stevuke79]

Why not treat the LLCs as disregarded entities? You could put the rentals right on Schedule E page 1.

Btw, if you use the 8825 (form for rentals in pass throughs) it should go to rental income on the K1 and not be subject to SE tax unless it's their trade in which case it's subject to SE tax even without the 1065.