My client has reported rental properties for many years on his jointly filed 1040 schedule E. In February, 2009 he and his wife signed a (two member) LLC agreement to house these rental properties. His wife died in September, 2009.
I am confused on how I would report this on his 2009 1040. Do I transfer all the assets to the LLC in February, and continue to depreciate as before until September, and then transfer the assets back to the 1040 Schedule E and continue on with deprectation for the rest of the year?
Would I need to be sure the total depreciation is no more than what it would have been if they had stayed in one entity? Do I need to separarate all expenses and income similarly?
This seems to be soooooo much trouble because it is a jointly filed husband and wife LLC. He inherited ALL her property through joint tenancy. The end result of passing these assets, the income and the expenses back and forthe will make no difference in the end amount due and oweing in taxes.
I really just want to report this as a diregarded entity for the entire year as a schedule E 1040 item, but I am assuming this would be a no no. Any guidance would be appreciated.