LLC in a Trust

[DaveO]

Client has a used car lot and a number of rental properties. They were concerned about liability so we suggested the formation of an LLC. They went to an attorney and came back with an LLC for the car lot and another for the rental properties. They also have a revocable living trust that owns both LLC’s. Question is do they still have a single member LLC due to the fact the trust is the owner. If so, what ID number should be used for the LLC since the trust doesn’t have one? Can the trust obtain an ID number for the LLC’s even though it doesn’t have one? Usually these trusts are ignored for tax purposes until the owner dies but this case is a bit different.

[JG EA]

I'll try.

You say they and single member so I'll assume single member.

Client has a used car lot and a number of rental properties. They were concerned about liability so we suggested the formation of an LLC. They went to an attorney and came back with an LLC for the car lot and another for the rental properties. .

Sch C/Sch E

They also have a revocable living trust that owns both LLC’s.
Question is do they still have a single member LLC due to the fact the trust is the owner. .

.Key word revocable. Just to avoid probate.

If so, what ID number should be used for the LLC since the trust doesn’t have one? Can the trust obtain an ID number for the LLC’s even though it doesn’t have one? Usually these trusts are ignored for tax purposes until the owner dies but this case is a bit different.

See other posts about needing ID # if their are employees, etc. Other than that the LLC ID # are the numbers to use. The trust should not get an EIN because all things in the revocable trust are reported by the individuals.

[Burke]

Agree. If trust owns LLC, and is it's only member, then the LLC does not need an EIN unless it has employees, since it would be a disregarded entity unless it elects to be taxed otherwise. And trust, if it is a true revocable living trust, does not need an EIN as it is also a disregarded entity and all income is reported on the grantors tax return just as it would have been if the trust did not exist. So it looks like a Sche C for the car lot, and Sche E for the rental properties, which may have been what was happening in prior years anyway. Does the car lot not have employees? If so, it would need one for itself.

[DaveO]

Thanks JG and Burke

This came up since the Bank asked for an EIN. If I can convince them they don't need one then all will be well.

And no, there are no employees and not planning on any. He stocks only a dozen or so older, collectible type cars. We thought it was just a hobby but he did show a profit his first full year of operation.

[Burke]

Is the bank asking because T/P is trying to open accounts in these names? Sometimes you have to bean them over the head. Download and print a form W-9 (all four pages) and refer them to Part I, page 3 and chart on page 4, para 4(a) as to who has to have an EIN. Should be the T/P's SSN on everything.

[DaveO]

Transfer of Account

Yes, he had a seperate account each for the rentals and the car lot before. Now that he has LLCs is was updating the bank account information.

[Burke]

Sorry, I was editing message re W-9 when you were posting. See above.