Lawyer puts llc in a trust?

[DonB]

As an estate plan, lawyer creates a single member LLC owned by a revocable living trust. Next gets an EIN for the LLC and re-titles an oil and gas investment in the name of the LLC using the EIN. Knowing why is another story.

Royalties will be reported under the EIN. The income belongs on the grantor's 1040 schedule E but I see IRS tracking problems. Just put it there and wait for the letters? I know of no way to file a return using the EIN; does anyone know of such a way? The single member LLC and the trust are both disregarded entities and the grantor's SSN should have gone to the oil and gas company.

Does anyone see this differently?

[Roland Slugg]

The single member LLC and the trust are both disregarded entities and the ...

... oil and gas royalties/income should be reported on the grantor's F-1040, either on page 1 or page 2 of Schedule E. So just report it there and don't worry about a possible TIN mismatch.

Yeah, the TIN for the LLC was probably unnecessary, but as long as the income ends up on the correct return, I don't think it matters very much. The IRS's matching program looks for income that's NOT reported. It doesn't look for reported income that doesn't match up to a 1099, K-1 or other form. If the taxpayer receives a letter from the IRS some day, addressed to the LLC, asking about the oil and gas income, it can easily be explained.

[Gary2]

Presumably the application for the LLC EIN provided the trust's EIN as the responsible party (or maybe the owner's SSN). The trust's EIN application should have had the grantor's SSN.

So I don't see a tracking problem.

[Burke]

Income reported to the IRS under an EIN for an LLC which is treated OTHER THAN a disregarded entity, would go on the proper form, (1120, 1120S or 1065) conforming to the entity tax classification indicated on the EIN application. I would ask for a copy of that application for your files, and/or the letter the IRS issued which states which tax form it is required to file.