Has anyone else seen this with their clients?

[NECPA in NEBRASKA]

I have a married couple that began an S Corp on the advice of their now deceased, non-tax attorney many years ago. The only property that this S Corp holds is investments in Real Estate LLCS. It's all passive income, they are not active, just investors. It's been a pain for a long time, mainly because of the losses carryforwards and the basis computations. It just gets more difficult as they add more state K1s. 

I have never seen anyone else hold investments this way, but I have always worked for small companies and have been on my own for years. I was just wondering if this is a normal way to hold investments and maybe I need a more powerful tax program just for theirs. It is so time consuming and I spend a lot of time worrying that I am not preparing the corporate and individual returns correctly. The K1s from the LLC are turning into books now with all of the new regs on 1065s. I have gently tried to steer them to move to the much larger CPA firm that prepares the 1065s as their tax preparer, but they aren't willing yet. There won't be much choice for them soon when I retire. It just seems to me that it would be so much easier if they were held personally, but maybe the Corp is for some protection?

TIA

[DANRVAN]

10 hours ago, NECPA in NEBRASKA said:

just seems to me that it would be so much easier if they were held personally,

I am not aware of any tax advantage of holding the investments an S-Corp., but there is extra accounting cost as you know.

Now they are stuck with it, unless they wish to deal with gain from distribution under section 311(b); or nondeductible losses if basis of investments are greater than fmv.