IRS Taxes - Transitioning from Schedule E to an LLC

[Chris McHaney]

I've tried to search and haven't seen exactly what I am after, so I thought I would bring this to the group. 

After many, many years of owning our own rental properties and filing our federal returns, utilizing Schedule E, we decided to form an LLC for a few reasons, mainly to serve as a property management business, and place our rentals under the LLC as well. At some point we decided to not quit claim deed the properties to the LLC and keep the LLC as a means to facilitate all the collection of rent, and payment of bills of our rentals. Not quit claiming is always a subject that gets both sides, and I'm not wanting to debate that here. What I am wondering is how to categorize all the income and expenses of the LLC vs putting the info on our Schedule E? This is a multi member LLC, so I am assuming that at the end, the numbers from the PNL get inputed, a Schedule K I think it is gets issued to the owners of the LLC. However we still have all of the properties in our personal names since we didn't quit claim them over to the LLC.

Fun, fun right? Starting a company sounds all daisies and puppies until you have to post your confused self question in the Bigger Pockets Forum. Thanks in advance to the smart people here. When my CPA says, "interesting conversation Mr." I know it will cost me more this year in tax preparation. ;-)

Chris

[Steven Hamilton II]

The problem is not treating it as a separate entity such as a formal PM. You will need detailed books. Most expenses will be allocated to the properties. The PM LLC NEEDS to have it's own account and a "trust" account for the assets it receives on behalf of others.