LLC report tax on Sch C or Sch E

[Frank W Lentine]

New Pro member in Phoenix, AZ. Just filed personal tax return for 2017. LLC holding our first 4 plex was filed a while back. I was surprised to find that depreciation was not deductible and loss was not reported as non-passive but passive so it stays with the LLC 1065 to match against income for 2018.

Need some help.  What should I be doing different?  Just purchased another 4 plex last month and don't want to make the same mistake.

[Michael Plaks]

@Frank W Lentine

You may be rushing your decision to switch CPAs. I'm not convinced that your CPA did anything wrong.

Whether or not you filed a partnership return or reported it directly on Schedule E - the bottom line would be the same. Your losses are locked up and pushed into the future. They will eventually be unlocked when you sell. (More complicated with the partnership.)

You're hoping to not "make the same mistake" - but there was no mistake.

The only mistake could be filing a separate partnership return, something to look into.

If, on the other hand, your CPA does not give you what you need - like explanations and tax planning, for example - then it may be worth looking elsewhere.