CA SMLLC with 2 real estate properties

[jerry]

Client had a rental property in a CA Single Member LLC.  I prepared a Schedule E, and then selected that as the source for the CA SMLLC.

Client has now added another rental, so 2 Schedule E's.  How do I link both Schedule E's to the same SMLLC?

[itonewbie]

If you're referring to the couple's individual income tax return, what is the link to SMLLC you're referring to?

These will just be reported on Sch E as two other rental properties.

See also this recent discussion about CA SMLLC rental properties:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/llc-for-rental-homes-sc...

[jerry]

Sorry I wasn't more clear - I guess tax brain is leading me to too much brevity.  Let me elaborate.

California client (MFJ/MFS) had a rental property, filed on Schedule E.  His attorney advised him (he is ultra high net worth) to move the property to an CA Single Member LLC for liability reasons.  That's OK, that's a legal question, not a tax one.  I added a CA SMLLC to his tax return, linked it to the Schedule E, and all was well.  Federal got the Schedule E (treated LLC as a disregarded entity), and LLC reported the income (loss) from Schedule E.

Then client added another property to his portfolio, and attorney had him put it in the same LLC.  Now he has 2 Schedule E's, one for each property, and for Federal, 2 Schedule E's need to be filed.  But Lacerte seems to only allow a single Schedule E to be linked to a CA SMLLC.  So I'm stuck.

How do I file a SM LLC 568 return when the source data comes from 2 different Schedule E's?

[itonewbie · Accepted solution]

1. On Screen 54.013, California Single Member LLC, scroll down to the section for Additional Linked Business;
2. Under Form, select Schedule E (rental), and under Activity Number, enter 2 (for the 2nd Sch E property);
3. Repeat step 2 for the 3rd and 4th property.

Data from all 4 Sch E properties will then flow through to CA Form 568.

[jerry]

Excellent, thank you!

I discovered that I actually have to put both Schedule E's in the "additional linked properties" table, but it picks both of them up.

Thanks again

[itonewbie]

NP, @jerry!  Glad you have that resolved.

Enjoy your weekend ahead (if you can) 😀

[jerry]

So now I have the next problem with this.  

Client now makes enough money that the returns have to be split into 2  MFS to minimize the CA Mental Health Services Tax (even though rentals had zero net income).

Even though I specify that both rentals are Taxpayer's, Lacerte still splits the rental income and expense between the TP and SP, which I can live with (even though only TP owns LLC).

BUT, the SMLLC return, which is only his, is split between both MFS returns, as if each spouse has the LLC, with the income divided equally.  They don't both have the LLC.    

I'm thinking of ignoring the SMLLC's on the split returns, and e-filing the SMLLC from the pro-forma joint return, which has accurate info

Comments?

[abctax55]

@jerry 

In Setting > Options > Tax Return > Federal Tax Options > 5 up from the **bleep** to NOT a community property state.    Make sure you do have the correct things tagged a T & S, then split the returns. 

This 'should' work for the LLC problem; not sure about all the rest of your clients income items.  

I use this to figure the "attributes" for married clients that just have to know who owes how much/who gets how much of the refund.

Good luck