taxmo
Level 4
Level 4

My current understanding is that if they are legitimately domiciled in Texas, their joint ownership of an LLC that owns a rental property in a non-community property state can still elect to be treated as a disregarded entity under Rev. Proc. 2002-69.  The Rev. Proc. doesn't address this specific situation, and I'm not aware of any tax court cases that address it either, but the interpretation I've seen is that they each own partnership interest in an LLC, and they're domiciled in a community property state, so the LLC is community property that they can elect to file income from as a disregarded entity.  

So my current understanding is they can just jointly file their Schedule E rental income.  I might recommend that they still change the ownership to a single member LLC to avoid any uncertainty in the future. 

View solution in original post

0 Cheers