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Tax Question: Please Help
Old 02-07-2009, 10:04 AM   #1
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Tax Question: Please Help

I really need some help figuring out the best way to handle my tax situation. I've been doing my own taxes for the the past 15 years and over the years I've acquired some small single family rentals and one 8 unit building. I now have a total of 14 properties but I still continue to do my taxes myself because of the astronomical quotes I've been given by tax accountants. I am CPA so I figure I can do this myself. Luckily, I've not had an audit but I wanted to double check with the experts on the board to see if I am doing this right.

The 14 properties are held in 3 different LLCs. I manage them under a different LLC which is used exclusively for managing the property (preparing leases, advertising, etc) but this LLC does not hold title to any of the properties. I track all the income and expenses for each property separately (by property). When I file my taxes, I use schedule E and list income and expenses on the schedule E for each of the 14 properties (this is of course tedious). As for the administrative expenses, I allocate evenly accross all the 14 properties and include the portion on the schedule E. Here are my questions:

Should expenses and income for the property be aggregated by the LLC under which they're owned and reported on Schedule C or should I continue to report them separately on the Schedule E by individual property. The latter seems cumbersome especially if I continue to acquire more properties?

As for the administrative expense, should that reported as a business expense under the LLC that I use to manage the properties. If I do this, this, I would have no income in this LLC because all the income is reported on Schedule E separately by property.

I know my post seems a bit convoluted but I tried my best to explain.
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Old 02-07-2009, 03:30 PM   #2
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Rental income is reported on Schedule E, even with your LLC's. IIRC, the only time you report rental income on schedule C is if you provide other services of significance, much like having a hotel where you provide maid services.

You don't want schedule C anyway and have to pay self employment tax.

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Old 02-07-2009, 03:54 PM   #3
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Thanks Martha. How do you think I should treat all the general and adminstrative expenses for actually managing the business (all 14 properties) such as:

Advertising
Printing supplies
Computer supplies
mileage
Home office expenses
etc
etc.
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Old 02-10-2009, 05:31 PM   #4
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Any tax experts on the board who can help out with this issue?
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Old 02-11-2009, 09:33 AM   #5
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Letj, I would go talk to your tax advisor. You use a separate entity for management. That makes me a bit uncomfortable because of passive loss rules.
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