mess up on income recognition

[Bogdan Naescu]

Hello BP,

I have multiple rentals ,which I manage via 2 LLCs . Due to an error in my property management software, the rent from one unit owned by LLC A ended up being credited on the account of LLC B. The 2 LLC have no business connection so I'm struggling to justify this transaction and how to correct it.

Should I post a correction journal to transfer the funds back between the 2 companies ? would this be an acceptable practice from an accounting / tax / legal pov ?

Can anyone please advise ?

Thanks ! 

[Jim Kennedy]

There's a good chance it wont make a difference to the IRS, because you're taking it from one pocket, putting it in the other, and both pockets are in the same shirt. Of course, it should be corrected, and that might be as simple as a journal entry.

Jim Kennedy