Hello, there is an apartment complex and some single family homes. Ther is also own an LLC. None of the properties are finance through the LLC due to the difficulty of securing the loans in the LLC name. The LLC is about 10 years old. We have been filing Scedule E's but WANT to file Schedule C for college financial aid purposes....I think we could have sooner but just haven't. Under college financial aid rules, as I understand it, a family business' assets with less than 100 employees are exempt from "counting" towards financial aid. The rentals are the only assets we own (no stocks, bonds, retirement accounts, etc) and operating them is my sole source of income. Although it is not alot by many standards, it is all we have (about 200K). In the past, I have been "paid" by just taking money out of the business account for "personal" use by transfering it to our personal acccount. I know that needs to change and perhaps we did it wrong. However, ALL monies first go into the LLC account(s) and bills, etc. are payed from that. We have a separate personal account for our personal expenses.

It is being reccommended that ownership of the LLC be solely my husbands and have my husband hire me as an employee out of the income of the LLC....like we've been doing but without filing a Schedule C and therefore no employment taxes. My husband provided most of the capital to originally buy the properies, provides an ongoing salary (through an outside job) so that we could get them financed, does a little maintenance, and has the final say on all major decisions. I handle the day to day stuff and spend about 15 hours/week doing this, earning about $10/hr. I'm also getting my property mgt lic so we can manage for others "officiallly." Doing as suggested, I'm told would serve several purposes:

1. Make it still a family business since I'm an employee and he's the owner.

2. Thereby Exempt the assets from "counting" for college financial aid purposes.

3. Allowing my husband to make a contribuition from the company to my 401K (that doesn't yet exist). Under college financial aid rules, "voluntary" contribuitions are added back in as income. Employer contributions are not therefore it allows us to keep some of our monies (to borrow against for educaiton purposes) while reducing our countable income...alabeit not alot but some. With our lower income and three children with autism, every penny helps.

One more piece of info: Also suggested was to take the LLC and make it the mgt LLC. Start another one as the "holding" LLC of all the properties and start a 3rd as an umbrella LLC that owns the other two. That way, since it is a mixed LLC(due to the umbrella), a Schedule C could be filed under the umbrella LLC name. (Although I read a Schedule C should be filed for the mgt LLC and a schedule E for the holding LLC...not sure what is correct.) Is there an easier way or is this accurate/inaccurate?

So,

1. Can my husband file a schedule C? Must the properties we own be in the name of the LLC to file with a schedule C? Must they be only in his name? If not, what needs to change?

2. What the structure outlined above work or is three LLC's necessary?

3. If a scheddule E still needs to be filed, what is the best way to avoid this, even if we need to pay employment taxes...especially since I materially participate and am getting my prop mgt lic.?

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