Reporting LLC rentals on Schedule E or K1? - Posted by HR
Posted by HR on October 31, 2000 at 07:15:54:
I have been placing my rental properties in their own LLCs, using my ss# as the tax id #, and reporting them on schedule E of my 1040. Recently, a very experienced local investor told me he files separate returns for his llcs (1065, I think?) and then reports just the bottom line as K1 distributions on his 1040. While it is some extra accounting paperwork (and expense for my accountant to do it), he believes it limits his chances of being audited by the IRS since, if they do audit his 1040 tax return, they just get the bottom line numbers and not the full scenario (like they do on my schedule e). He contends they would have to audit his LLCs as well, which he says is unlikely.
Thanks in advance! And Happy Halloween.