LLC is owned by mom, dad, and child. Do I need to do a LLC return? Or can it be on schedule E?

Forum|Forum|5 years ago
June 26, 2020
3 replies
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I have a client who owns rental real estate in their LLC. The LLC is owned 43.5% by husband, 43.5% by wife, and 13% is owned by minor child who is a dependent (she is 3 years old). Do I need to do a separate tax return (1065) for this LLC or can it be on Schedule E?

Also, I understand that this shouldn't trigger the child to do a tax return unless the net income is over $1100.

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dd4vols

Intuit Community Champion

The CP 575 (when you got the FEIN), should detail the appropriate returns that need to be filed. But, based on the questions you have raised here, you probably should suggest that client seek a preparer who understands taxes and filing requirements a little better than you. It will just protect you from making some costly (to you) errors, I suspect.

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T

TaxGuyBill

Level 15

If they had all owned it individually, it could probably go on Schedule E. But the LLC owns it, so the multi-member LLC needs to file a Partnership return.

One correction ... the child would need to file a tax return is gross income is over $1100-ish. Because it is a Partnership on the K-1, it will end up being the "net". But if it had been on Schedule E, it would likely be the gross amount before deductions.

G

Golfer2016Author

Level 5

Bill, I have heard that if a husband and wife both own the LLC it can go on schedule E...thoughts?

T

TaxGuyBill

Level 15

If the ONLY two members of the LLC are husband and wife AND it is in a Community Property State, then you can use Schedule E. But if there is anybody else in the LLC, that option is not available.

BobKamman

Level 15

Have to wonder who it was who sold them THAT seminar.

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