LLC question

[Unregistered]

client was/is partner in a 2 partner LLC that holds
an apartment building. 2005...my client bought out the other
partner's interest early last yr.
question is..how is the rental income reported for 2005...
partnership return or can i just use sched E on 1040.

also on form 8832 entity classification election...when is it
appropriate to fill out the info on line 3 (disregarded entity info).

why/when would an entity be "disregarded".

thanks for responses/great board

[sea-tax]

client was/is partner in a 2 partner LLC that holds
an apartment building. 2005...my client bought out the other
partner's interest early last yr.
question is..how is the rental income reported for 2005...
partnership return or can i just use sched E on 1040.

also on form 8832 entity classification election...when is it
appropriate to fill out the info on line 3 (disregarded entity info).

why/when would an entity be "disregarded".

thanks for responses/great board

I would say you would put income and expenses on 1065 split between the appropriate dates. Basically you prorate the income or loss depending on when the one partner bought out the other.
Example A buys out B on 3/31 so from 1/31 to 3/31 income and loss is split according to prior share. 3/31 to 12/31 is 100% to A . Give B K-1 for his share and A for his.

One other issue you may have is that I think when a partnership exchanges more than 50% of the ownership then a new entity has to be formed. Hopefully someone else here may give you some more info. Good luck

[Unregistered]

The LLC ceased to exist on loss of member

Sea-Tax is right.

According to the Regs. the LLC ceased to exist when more than 50% ownership changed. Technically the remaining member should have created a new SMLLC or he/she is acting as a landlord, with reporting on 1040, Sch. E.

JoshInNC