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I posted on this topic numerous times, I would use a 1065, in almost every case I want the 1040 to be from flowthroughs. I might even give a spouse or child .0001% just to get it off of the 1040. High 1040's have a higher rate of audit, and an auditor will make you prove expenses aren't personal. Having it as a 1065 makes it easier down the road to add partners or transfer percentages each year to children. If any legal issues occur you only have to supply the 1065 to a tenant for example and not the whole 1040 which even though protected, shows all your other income or assets. When your loving couple gets divorced, its much easier to trace the distributions. Since the amount of accounting you would have to do is the same whether on an E or 1065, the only extra prep cost is the actual filing out of the form.

I'd do the 1065. They want to be an LLC, presumably for legal protection. So I recommend being consistent in all things and act like an LLC. Some people don't bother to title the property in the LLC name. How does that work if there's legal action?

Good Luck and Good Riddance. Don't let the door hit you in the arse on the way out. I can only hope that your time on the future federal retirement dole is short. Demonizing the work I do and trying to *always* lump me together with the criminals that your office did so little to pursue.... Just go. Rich

You make some very good points that I had not considered, Michael. i usually do a 1065 for partners, even husband and wife partners, just because that is correct. Now I have even more reasons to do that.

​I agree 100 %

​ Click the emoticon smiley on the toolbar and you should see 21 emoticons at that point. By clicking on "Categories" at the upper right corner of the popup box, you can then choose "core_emoticon_group_default" that will show all of the emoticons we had with the old version of the forum and still do.

​I am in a CPState. I put it on the E. Some of these clients have such complications already that adding a 1065 to the mix is just not user-friendly. Sometimes a "smart" attorney just makes a little extra money by talking them into an LLC.

I agree with you, jmdaviscpa, for what it's worth... and that ain't much!

It's a debatable topic. I have several H/W LLCs that I disregard and put on Sch E. First off, it will not likely be raised on an audit. Second, the IRS has no tax to gain by moving it to a 1065. Third, we have automatic removal of late filed 1065s if all income is timely reported by partners. I'm not worried.

Helps explain why I often don't know whether I'm coming or going.

Call your sales rep. Their online renewal system is ultra lame on its best day.