LLC Setup for STR Business with Stay-at-home-spouse

[Joshua Saunders]

Hello all,

I'm needing some advice on LLC Setup (or not) for a STR business. Here is my situation:

- I'm a W2 employee that earns north of $500k a year
- My wife is a stay-at-home-spouse
- I'm looking to buy ~ $1,000,000 in STR Real Estate by the end of the year (as an investment and to offset my tax bill)

I'm fairly well versed in the rules surrounding using STR to offset active income. My wife will materially participate in the business and I'll provide the financial backing.

I've talked to a couple local CPAs and done a fair bit of internet searching on legal entity setup for my situation, but haven't been able to get a straight answer. I *think* I'd like to set up an LLC to house the STRs, but I'm struggling on the implications of single-member vs multi-member. In my mind, a multi-member LLC where my wife and I are 50/50 partners make sense, but I don't know if that will cause problems at tax time with counting losses from the LLC against my active income. If I were to create a single-member llc and give my wife 100% control, that seems like I would be at risk of losing everything in case of divorce (god forbid). Any advice is appreciated.

[Ashish Acharya]

You don't need an LLC for tax benefits. However, based on new IRS audits, we recommend LLCs even with no tax benefit. It helps you establish one economic unit to meet material participation hours.
If you are in higher income tax brackets, I suggest getting a multi-member LLC for audit protection.