LLC created to for rental property but LLC doesn't own the properties

[ptax255]

Hi, client has one rental property and created an LLC with address of the property, but the property itself is under his personal name. LLC is in CA  and will need to file form 568. Am I correct, that unless the LLC owns the property than rental income/expenses shouldn't go on the LLC return? Do I file it with just $0?

[sjrcpa]

If the LLC is disregarded for tax purposes it all goes on the 1040 Schedule E of the owner so it doesn't matter.

But CA still wants its $800 for the LLC. And I guess the 568 shows -0- revenue.

[qbteachmt]

"and created an LLC with address of the property,"

If it is multiple partners, you should ask if they executed a lease. A lot of people seem to be running Air B&B out of leased properties.

Or, perhaps he thought naming the LLC for the address was good enough? Bad guidance and entity formation seem to go hand-in-hand.

[ptax255]

Husband and wife are the LLC members. They jointly own the property in their personal names. No lease agreement.

[sjrcpa]

Did you ask why they didn't transfer the property to the LLC?

Won't help the past.

And maybe they should just kill the LLC.

[ptax255]

They do plan to transfer it in the future. I also don't think they were aware that there is no tax savings with the LLC. Common theme with rental owners that think LLC will save them taxes. Am I missing something?

[sjrcpa]

No.

[ptax255]

Thanks for confirming.