STR Partnership LLC Tax

[Brandon Krasner]

I just started operations in 2024 doing STR arbitrage. Here is the structure of the LLC's:

-I live in PA and have a holding company LLC incorporated in DE.

-My business partner lives in MA and has a holding company LLC incorporated in DE.

-Our partnership LLCs (we have 3) are owned 50/50 by each of our holding companies, and are incorporated in DE.

-The properties are all in Arizona, and I am the capital partner while he is the operations partner. Obviously, we will need to file a 1065 and produce K-1s. I have received a very high quote ($1,500/each entity) from my CPA to file the partnership return, and am looking into other options.

-One of the cheaper options I have found is TaxAct Business ($140 + states), and TurboTax Small Business ($739 + states).

The issue I am potentially running into, and I am not sure if the online software's mentioned above can handle (they won't tell me unless I pay for advice), is figuring out how to make sure the losses/initial capital contributions are reflected on my K-1 and not my business partner, since I made 100% of the contribution. I'm sure there are other things I am not thinking about either. I am just not sure I can swallow $1,500/entity. I also plan on adding more partnerships to my portfolio possibly this year also.

Appreciate any advice, thank you!

[Joshua Thompson]

Brandon, I know this isn't the advice you're looking for but a good tax professional is worth their weight in gold and I'll be honest their quote can be reasonable. I don't know the entire situation so I say can be reasonable. Many colleagues I've spoken to start at $1,200+ and I've learned the hard way, you get what you paid for.

Unless you have a tax background I would not recommend tackling these returns yourself given all you're doing and if you plan to add more partnerships in the future it's even more important you work with a tax professional you know, like, and trust.

I've seen people in the same situation to save ~$3,000 in prep fees, did the return themselves, then received a $120k IRS notice of change to their return. They panic then have to pay someone to do an amended return and get a POA to figure things out with the IRS.