Multi-member LLC transition to Single-member LLC

[Jesse]

I seem to become too easily confused with the disregarded entities and legal vs. tax implications and have yet to make a transition from a Partnership/MMLLC to a Sole Prop/SMLL, so please bear with my ignorance.

MMLLC filing Form 1065 has lost the only other member due to death, so remaining member will be the sole member to become a SMLLC.

This is a new client and the other member(brothers) passed away in March, so the final 1065 is already late and come to find out one of the loans and a piece of equipment was actually in the name of the existing member and was never in the title of the MMLLC.

First I want to go forward with the SMLLC, the lawyer is suggesting this equipment be leased from the member, as an individual, to the LLC. I'm suggesting he canNOT do this because the SMLLC is a disregarded entity for tax purposes so he can not lease from himself, correct? Also, it is not my place to give legal advise, but isn't that defeating the purpose of the limited liability?

Since the equipment and loan was not in the name of the SMLLC, but in the members name, as a disregarded entity can the interest and depreciation of the equipment be deducted on Schedule C?

As far as any of the assets titled in the MMLLC can we transfer them to the SMLLC at the tax basis and continue on the current depreciation schedule?

[Gretel]

I seem to become too easily confused with the disregarded entities and legal vs. tax implications and have yet to make a transition from a Partnership/MMLLC to a Sole Prop/SMLL, so please bear with my ignorance.

MMLLC filing Form 1065 has lost the only other member due to death, so remaining member will be the sole member to become a SMLLC.

This is a new client and the other member(brothers) passed away in March, so the final 1065 is already late and come to find out one of the loans and a piece of equipment was actually in the name of the existing member and was never in the title of the MMLLC.

First I want to go forward with the SMLLC, the lawyer is suggesting this equipment be leased from the member, as an individual, to the LLC. I'm suggesting he canNOT do this because the SMLLC is a disregarded entity for tax purposes so he can not lease from himself, correct? Also, it is not my place to give legal advise, but isn't that defeating the purpose of the limited liability?

Since the equipment and loan was not in the name of the SMLLC, but in the members name, as a disregarded entity can the interest and depreciation of the equipment be deducted on Schedule C?

As far as any of the assets titled in the MMLLC can we transfer them to the SMLLC at the tax basis and continue on the current depreciation schedule?

Trying to give some ideas going from end to front.

I think the 1065 LLC needs to be dissolved on state level and for IRS purposes. I dealt with this last year (most of it forgotten already - but you might find some info beneficial to you going back to my post). My situation didn't involve death. The basis of the assets will be calculated taking several things, like cash, Accounts Receivable etc. into account.

It will make no difference whose name was on the title for interest and depreciation. If you have a non-LLC business as Schedule C you can also have an assumed business name.

The lawyers suggestion doesn't make much sense to me. I think I would want to have the equipment covered under the limited liability. The rules of not being able to rent to yourself should apply in my opinion.