Transfer Apartment building to Single Member LLC-California

[DMICPA]

Client decided to transfer his apartment building to a CA-LLC, single member. Transfer was done March 1 of 2025.
Since client gets all the income, is it necessary to pro-rate 3 months to Schedule E and 9 months to the LLC CA 568 and another Schedule E. No matter how you allocate it, the income all goes on the client tax forms.

Wouldn't it be one Schedule E for 3 months and right next to it (property B) the remaining 9 months. When you add them up, the total is the same.
This would be for the first year only as in 2026 the entire property would be reported on Schedule E as one entity.

To allocate Depreciation and pro-rate items would be difficult and there is no difference in tax.

[TaxGuyBill]

For income tax purposes, the Single Member LLC is a "Disregarded Entity". That means you should disregard it and treat it as if nothing has changed for income tax purposes.

I am not an expert in California insanity, but it seems logical to me that the CA 568 should only mention the income while the LLC existed, which means the prorated year.

[Rapid Robert]

Because there is the potential of separate LLC tax in California (only at relatively high levels of gross revenue), you need to file the Form 568. Depending on your software, I don't think it would be that hard to split the two Schedules E, but on the other hand if it in fact does not trigger the separate tax, you could just treat the entire 12 months as if it was under the LLC, which would make the reporting a little easier.