Query on Schedule E

My husband and I have an LLC and thru it we lease out a small commercial property. (2 member LLC)
Can we add the income and expenses of this property to Schedule E as part of our 1040 taxes?
(instead of filing form 1065 and preparing K-1's etc)
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On Monday, August 26, 2019 at 8:27:46 PM UTC-7, Christine wrote:

Apparently, if you are in a "community property" state; under state law, the LLC is considered community property; and you do not treat the LLC as a corporation, then the LLC is a disregarded entity for Federal tax purposes.
Otherwise, not, although there will be very little difference on your returns if you treat the LLC as an S-corp.
-- Arthur L. Rubin, Brea, CA
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Just to clarify, the property is in FL. Does this change your answer?
On Monday, August 26, 2019 at 8:27:46 PM UTC-7, Christine wrote:

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What matters is where you live, not where the property is located. If you live in Florida, that does not change the answers that you have received. Florida is not a community property state.
The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you live in one of those states, the answers might change.
Bob Sandler
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On 8/26/19 8:25 PM, Christine wrote:

There are two of you so you can't be a sole proprietorship. You can not be a husband/wife qualified joint venture because you created an LLC. Therefore, you are either a corporation or a partnership. Either way, you can not avoid filing either the corporation return or a partnership return. As you are the ones that created the LLC, you should know whether you are a partnership or a corporation.
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A multi-member LLC is treated as a partnership by default. To have it treated as a corporation you would have to have filed a form with the IRS electing to treat the LLC as a corporation (Form 2553 or Form 8832). If you have not filed such a form, your LLC is treated as a partnership for income tax purposes, and you must file Form 1065, including the Schedule K-1s.
Bob Sandler
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So in this instance "disregarded" isn't completely accurate?
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Only a single member LLC can be disregarded, and not if it's elected to be taxed as a corporation.
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On 8/27/19 7:17 PM, Alan wrote:

Based on Bob Sandler posting the revenue procedure I have to modify my answer as there is one other option. Assuming that the couple did not file incorporation papers with CA, it is a partnership. The RP states that it can be considered a disregarded entity (no 1065 need be filed) if the owners are husband and wife, hold 100% of the ownership and it is not a corporation. In this instance it would be their choice to make on the first filing of a tax return. If it is CP and they choose to treat it as a disregarded entity on a joint return they would report income and expenses on a single Schedule E if the commercial property is rental property or they would report the income and expense on two Schedule Cs (one for the husband and one for the wife based on the community interest) if the commercial property is a business. It would only be a business if the owner(s) provide substantial services for the tenant's convenience beyond just utilities and trash collection. CA assumes that all property regardless of situs obtained by a married couple during their marriage other than by gift or inheritance is community property unless the couple can show that the property is separate.
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I agree with the rest of your statement. But as far as community property is concerned, it's not just an assumption, but it's the law: any money or property earned by a married person in California, as a result of his "skill, foresight or industry" (services) is community property unless there is a written agreement between the spouses designating it as something else.
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On 8/29/2019 1:17 PM, Stuart O. Bronstein wrote:

If one can show real property has been acquired with separate property, that real property is separate property. Absent a written agreement, a portion of the earnings or appreciation due to "skill, foresight or industry" may be community property.
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On 8/29/19 1:17 PM, Stuart O. Bronstein wrote:

I thought about not responding to your post Stu, but then decided to make two points. I used the word presumption, not assumption. They are not the same. Even CA refers to acquisition of CP as a presumption in Div. 4, Part II, Chapter 4 "Presumptions Concerning The Nature of Property" section 802 of the Rev. & Tax Code. I think they use "presumption" because Section 760 that tells you what you acquire during the marriage is CP, it starts by telling you that there are statutory exceptions. Hence, it is a presumption until you can show otherwise.
Lastly, many of the replies in this thread said that your residence determines whether the property is CP. The CA statutes are quite clear that it is not residence, it is where you are domiciled. A person can only have one domicile and have multiple residences. CA defines domicile in Title 18 Sec. 17014 of the Code of Regulations.
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Thank you for all your responses.
Just to clarify further. We are residents of CA for 2018 tax purposes but the small commercial property is in FL. Not sure if this info will change any of your answers.
On Monday, August 26, 2019 at 8:27:46 PM UTC-7, Christine wrote:

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On Tuesday, August 27, 2019 at 11:04:31 PM UTC-7, Christine wrote:

I am a California tax preparer, but the question of whether the LLC is considered community property under California law is too complicated for me. If it is, then it is probably a disregarded entity under Federal law. Wherever the LLC is registered, it probably needs to pay the $800 California LLC tax. -- Arthur Rubin, Brea, CA
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The question of community property in OP's case comes down to this: where did they reside when they earned the money being reported on the tax return? If they earned the money while being California residents, it's community property. If they were Florida residents when the money was earned, it's not community property.
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On 8/28/2019 11:23 AM, Stuart O. Bronstein wrote:

If the property was community property while they resided in a community property state, it does not loose its community property characterization if they move out of state to a non-community property state. But what about the earnings? If the earnings come from community property, they remain community property, right?
Not of relevance to the OP, though.
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How property is characterized at any given moment is based on the state of residence at that time, and also the state of residence when the property was acquired. So money earned while residing in California is community property. If the couple then moves to Florida, it's still owned half by each spouse, but it may no longer be considered community property under state law.
In this case OP said they were originally in Florida (not a community property state), but then moved to California (a community property state), and she wondered how to file a tax return for a disregarded LLC for the time they lived in California.
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If the LLC is community property they have a choice of treating it as a disregarded entity or treating it as a partnership. See Rev. Proc. 2002-69. Based on the original question, it seems that the OP would like to treat it as a disregarded entity, if they have that choice.
Here's a link to Rev. Proc. 2002-69: https://www.irs.gov/pub/irs-drop/rp-02-69.pdf
Bob Sandler
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OK, this is a bit confusing to me. An LLC taxed as a partnership IS a disregarded entity, which the Rev. Proc. itself states. But it also states that a husband and wife can elect to be taxed as a partnership or a disregarded entity, which seems to contradict the former statement.
I think they mean that the husband and wife can either file as a partnership or each file a Schedule C claiming half the income and half the deductions, if it's located in a community property state.
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On 8/28/2019 3:47 PM, Stuart O. Bronstein wrote:

a partnership, having to file a partnership return, is not a disregarded entity.

If the property is community property, I think they can file a single Schedule C (or E, more likely).
If the property is not community property, they each own their share as separate property. Then what? Two Schedule Es? A partnership return?
Questions for OP: explain how you acquired this property, with what resources, and the nature of those resources (community property?)
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