I'm trying to sort out a bit of a mess. I have not filed for '05 or '06 yet as I am uncertain of which path to choose. In Nov. '05 my wife and I set up an LLC (NJ) for the purpose of daytrading. I daytraded prior to that in 2 diff. accounts set up as JTWROS. When I filed my '04 return (Apr 05) I included a letter claiming 475(f) treatment (Mark to Market) for '05. After the LLC was set up (11/05) I opened a new brokerage acct in the name of the LLC and closed the other two. We never filled a 1065 partnership return for 05 or 06 nor did I file the 3115 (due with the 05 return). We lost money in both 05 and 06 both prior to the LLC and in the LLC. I don't 'owe' any money from those years but I want to clear everything up. We didn't trade after 06. At this point my biggest concern is that if I file a 1065 now I face large penalties for not filing. Can I just forget about the 1065 and show all the info on 1040 Sched E as if I had a K-1or should I file a Sched C for part of '05 and a Sched E for the balance of '05 and all of '06? My biggest concern is not paying any penalties.