PhoebeRoberts
Level 11
Level 11

The LLC became a disregarded entity automatically when the ownership changed from one person to two people. If that was in October 2021, the final 1065 is due on the 15th of the 3rd month, November December January: tomorrow by which I mean Tuesday 1/18. The penalty for being late in filing a two-member LLC 1065 is $420 a month. File the short-year extension request today.

 

No 8832 was necessary or appropriate (but also not harmful), and the effective date can't be any date other than the date of the ownership change.

I agree with Susan; no money needs to change hands and no gain or loss is recognized. Suspended passive losses with sufficient basis would adjust basis upwards; losses suspended for lack of basis are lost and gone forever, dreadful sorry Clementine.  So you can ignore the out-spouse's basis losses. The in-spouse's basis losses attach to the new Sch C activity. (I do question how you get a two-spouse partnership LLC with basis limitations, because that money came from somewhere, but that's an entirely different issue.)