1031 exchange, new LLC, am I a disregarded entity, community prop

[Andy A.]

Looking for some advice from Tax experts, like @Steven Hamilton II.

Sold an investment property in California. Opened a 1031 exchange. In escrow to purchase a replacement property (8-unit) in Nevada. Recently opened a new LLC in California. The relinquished property (the one I sold in California) was under my and my wife's name. Would like to acquire the new property under this newly opened LLC. The new LLC is a 2-member LLC with me and my wife as members.

1031 exchange provider says its perfectly fine to buy replacement property under this 2-member LLC as long its a husband and wife LLC and the ownership is Community property in a Community property state and only if you treat the LLC as a disregarded entity.

My CPA is advising me to not buy under this LLC. He was the one who helped me open this new LLC. He says its a multi member LLC and the EIN letter we received from IRS states that we need to file 1065 by Apr 15 (which is correct), which does NOT make this a disregarded entity.

My questions are: (1) Can't our LLC be treated as a dis-regarded entity? (2) It sounds like by default IRS thinks its a partnership (hence reference to 1065 in the EIN letter) - do we need to get this classification corrected? Do I need to file 8832 to change my classification?

Another good CPA contact that I have thinks its ok to take tile in this LLC since Community property rules apply which make us disregarded entity. See link below:

https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

Please advise. 

[Mark Creason]

Should try Dave Foster or Bill Exeter.  They should be able to help you.

Mark