How many LLC's?

[Burke]

I agree. This is a business, not passive rental income. Doesn't even sound like he will "rent" anyway. Most flippers don't. Just buy, improve and resell. That is his aim. And the houses are "inventory," and the profits are ord income, subj to SE taxes.

[John of PA]

I stand corrected, thank you for that clarification. The Management Company would be a separate Sch C and each LLC would also be a separate Sch C becasue they are all separate entities. If there is no activity, then I suppose you could omit the sch C. I don't believe they can be grouped unless the taxpayer is a real estate profesional.

[Gretel]

and each LLC would also be a separate Sch C becasue they are all separate entities.

Wait a second. SMLLC's are disregarded for 1040 purposes so only one Sch C will be filed unless there are other elections or it's not a SMLLC.

[John of PA]

SMLLC's are disregarded for 1120, 1120S, and 1065 purposes, but they do have to be reported on the 1040 (Sch C or E or whatever applies).

[Gretel]

SMLLC's are disregarded for 1120, 1120S, and 1065 purposes, but they do have to be reported on the 1040 (Sch C or E or whatever applies).

It is my understanding that they are also disregarded for 1040 purposes, meaning if it is the same business activity - flipping houses - only one Schedule C is required not matter how many SMLLC's there are. Reporting on 1040 follows the same rules as if there are no LLC's. In case of Schedule E you normally have different properties and then you have several LLC's. In case of different business activities you need to file a Schedule C for each of the activities. All of this has nothing to do with how many LLC's you have.

[Greenbriar]

One Schedule C

I agree with Gretel. SMLLC's are disregarded entities for federal tax purposes. If properties are bought for the purpose of fixing up and selling, rather than renting, which is a passive activity (Schedule E), then all the activity should be reported on one Schedule C. The properties are treated as inventory.

[Gary2]

I'm convinced that 95% of the federal tax questions that get asked about disregarded SMLLCs can all be answered with "'Disregarded' means ignore it. Pretend everything about the SMLLC belongs personally to the single member." Unfortunately, it feels uncomfortable to most tax pros to just ignore it.

The main (federal) exceptions are for employment taxes or those that have elected corporate treatment. At the state level, things get hairy.

[John of PA]

Disregarded simply means the entity does not have to file it's own Federal Tax Return. The activity still has to be reported to the Fed Govt. on the 1040.