LLC Rental Form 1065

[S T]

Preparing my first LLC (Rentals) on form 1065, Husband and Wife, 2 member LLC, only activity is a residential rental property.

So all rental income and expenses are entered on form 8825 of the form 1065 and then it flows through to the Schedule K-K-1 forms. Nothing on page 1 of form 1065.

Question - administrative expenses for the LLC would they be placed on the 8825 or on the front page of the 1065 as expenses? Telephone, postage, LLC filing fees, accounting, etc. LLC startup expenses (amortization).

Thanks

Sandy

[JG EA]

Front page

For what its worth, when filing a 1065 with only rental income, I put administrative expenses on page one. And of course interest income on K.

[Gretel]

I have done my first rental LLC, 1065, this year. I put everything on form 8825. JG, what is your reason behind to put admin expenses on page 1? On a 1040 everything would go on Sch.E, so my thinking is on 1065 everything goes on 8825.

[S T]

Also Curious

Gabriele,

I was also curious, as this is my first LLC Rental form on form 1065.

The thought just occured to me as I was posting the entries on the tax return. At first I was thinking all of the expenses would go on the 8825 (rental form) much the same as a Schedule E, but then when I got to the expenses of administrative for the LLC, I just started to wonder.

If there was more than one rental involved, you would more than likely have more than one 8825 form (one for each rental) just as we do on the schedule E, so then what do you do with the LLC administrative expenses. I know on multiple schedule E forms I just prorate and spread out among the various Schedule E's.

I also get the feeling after this one being my first one, that the taxpayer's attending these seminars on forming entities such as a S Corp or LLC, are also being told that they can incur additional expenses eligible for deduction as they now have a "legitimate business". My taxpayer happens to be in Nevada, and we have all heard those "radio advertisements".

I guess what bothered me was this blank page 1 of the form 1065, it just seemed so strange! And now the t/p has a business so to speak registered under an entity form like the LLC.

So I am curious to see what others think and what JG has to say why possibly placing the administrative expenses on page 1 of 1065.

I think both Gabriele and I would welcome some guidance and feedback,

Thanks,

Sandy

[JG EA]

1065 fees

I guess my thinking was that some things were not associated with the rental, but with the entity holding the rental. Like the example I used - interest on Sch K. You wouldn't put that in the rental income. It was earned on the rental account, but goes in a different place.

The other reason is because the return for the year before had been done it that way.
JG

[S T]

More thoughts

Hi JG,

My thoughts were similar, interest earned on the bank account, for the LLC on form 1065 would be separated on Schedule K, just as when we enter on the form 1040, goes to the Schedule B, not the Schedule E.

Then I was looking at office supplies, telephone, LLC fees, accounting fees, etc. Those are all for the LLC not necessarily for the rental. And then what if they have more than one rental, how do you separate.

In this taxpayer's case, they clearly incurred expenses that were operational to the LLC that had nothing to do with the rental operation, that is why I posed the question to separate.

Thanks for your input,

Sandy

[JG EA]

You're welcome.

Sandy,
Do you have any experience with my parnership question in earlier post?

Thanks,
JG

[Gretel]

Hi, Sandy and JG, seems it's the 3 of us. I just looked at the instructions for form 8825,
http://www.irs.gov/pub/irs-pdf/f8825.pdf.

Basically it says, that items which need to be separately stated, go on Sch.K, and activities which are not rental activities don't go on 8825. It doesn't say anything about administrative expenses.

I still think, that if only rentals are involved, the administrative expenses would go on form 8825, if more than one rental, than prorated as would be done with Sch.E's. It's probably not important where the administrative expenses are reported as long as Sch. K in done properly.

I agree with you Sandy, it rather looks strange to have a blank first page.

Gabriele

[S T]

Found a Sample Return

Gabriele,

Well after surfing around the internet for a while I finally found a Sample Return that had been posted. Altho they didn't break down expenses showing any of the office costs, and other administrative expenses, they entered all on 8825, and then the appropriate figures on the Sched K, and page 1 of the form 1065 is totally blank, with the exception of the Taxpayer name, EIN#, business code, etc.

So I guess all on the 8825 form and Sched K.

Sandy

[rosieea]

I've done several of these with a blank page 1. Never a problem.

[abby]

case by case

I have done it both ways - depending on the LLC's activities. If the LLC activities are fully in support of rental activies, then it seems right to subject all the expenses to support it to the actve participation in a rental activity rules. If there are other non rental activities or the prospect of them, then I will sometimes isolate the costs they would incur whether or not they had rentals and put them on pg 1.

Blank page 1 is definitely a possibility in these circumstances.

[Uncle Sam]

Administrative Expenses on 8825

I agree. Nothing wrong with blank p. 1 of 1065
I throw all expenses on 8825

[BOB W]

Yup.................

All related expenses on 8825, even if multiple units. If rental is all that is provided.......

Sorry for the late response, I've been "sleeping off" the heat lately.

[S T]

Thanks

Thanks all,

with your responses and other research that is what I finally concluded.

Sandy