Filing second year return for partnership - first year missed

[Jeremy Fields]

My partner and I formed an LLC in 2015 and purchased a rental home. This is our only investment property and the sole reason for the LLC.

In 2015 we did not issue a K1 and there was no return filed for the LLC. We filled out a schedule E. We realize this was not right and for 2016 taxes want to file correctly.

Should we file this year as the 1st or 2nd year? How do we handle depreciation? I am looking for an alternative to amending personal returns, etc.

Really appreciate any advice.

[Brandon Hall]

@Daria B. thank you!

@Account Closed where on earth are you getting this information? None of what you said is correct.

@Jeremy Fields if you and your partner both filed your share of income and expenses on your Sch E, then you're fine. Technically, you should have filed Form 1065 and issued K-1s, however there is a "Small Partnership Election" that allows you to avoid failure to file penalties if the IRS ever comes knocking. 

File the 1065 going forward and if the IRS ever asks about 2015, ask for the small partnership election and you'll be perfectly fine.