1031 from married couple to llc

[Jordan Ross]

We have sold our CA rental property & have identified a 6 unit in TX. The 6 unit needs to be put into an LLC. My question is a 1031 ok to do as married couple into an TX LLC. We have been hearing a single entity LLC with no creation of EIN.

The 1031 exchange company said it shouldn’t be a problem . My CPA cautioned me. I would like some reassurance that it can and has been done. 

Thank u

[Dave Foster]

@Jordan Ross, The tax payer has to be the same for the new property as it was for the old property.  That really means the tax return that reports the activity of the property you sold.  In your case it was probably on your joint tax return.  

Since CA is a community property state a husband/wife LLC can be a disregarded entity (meaning it does not file a tax return so all activity of the property is still reported on your joint tax return. If that is the case the tax payer stays the same. And the 1031 is valid.

Filing an EIN for an LLC really does not impact the disregarded status. When you file for the EIN you must choose taxation as a sole proprietor. This will let you sell as yourselves and purchase as the disregarded LLC.