Taxation and asset protection question

[Tam Truong]

I don't fully understand how tax structuring work so here is my question and I don't have the best accountant. I have 5 houses with each home under it's multi-member LLC, my dad and myself. I have been filing each LLC partnership return (1065) and the rental income would go on our personal returns.

1) Should I put all houses under single-member sole proprietor so that I don't have to file a partnership return (1065) for each home and the rental income just reported on the Schedule E of my 1040? (I'm getting charged $1k for each 1065)

2) Should I have a separate multi-member LLC that takes income from the 5 houses and that is the only partnership return I have to do?

Thanks in advance.

[Ashish Acharya]

Originally posted by @Tam Truong:

I don't fully understand how tax structuring work so here is my question and I don't have the best accountant. I have 5 houses with each home under it's multi-member LLC, my dad and myself. I have been filing each LLC partnership return (1065) and the rental income would go on our personal returns.

1) Should I put all houses under single-member sole proprietor so that I don't have to file a partnership return (1065) for each home and the rental income just reported on the Schedule E of my 1040? (I'm getting charged $1k for each 1065)

2) Should I have a separate multi-member LLC that takes income from the 5 houses and that is the only partnership return I have to do?

Thanks in advance.

If you dad owns the property too, you can put it under your single member LLC. He would have to gift the property if that would to happen.

You could do two ways if you both want to keep the property with less filing burden. 

1) One MMLLC can own 5 properties via different 5 100%-owned SMLLC (Owned by MMLLC) that does not file any return. So you would be filing one partnership return. I am suggesting this because I am sure you had reason to put five in five different LLC to begin with. There is also a series LLC that gives you same structure with less hassle.

2) If you didn't have to have each property in 5 different LLC(for various liability reasons), then one MMLLC can own all the property directly. You would still file one return.