Level 2

CA LLC was filed in 2018 for the rental property

Forum|Forum|5 years ago
July 1, 2021
2 replies
24 views

My client's attorney filed an LLC for my client putting one of her rental properties in it. Now in 2021 we find out about it. Though we have filed the 1120s and 100s along with personal returns for all the years we got notice from CA tax department that late fees are due along with the returns. What should be done with the form 568 at this point? Thanks in advance. My question is since all the assets are already reported on the returns already filed what should go on form 568 for CA and is there a Federal return to also be filed?

Thanks again

S N K

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qbteachmt

Level 15

This client has an S Corp holding rental real estate? Whew.

Who is the partner/owner of the LLC, on the paperwork?

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George4Tacks

Level 15

File the 568 for all years subsequent to the original. I some cases FTB may abate the penalties https://www.ftb.ca.gov/pay/penalties-and-interest/help-with-penalties-and-fees.html and the FTB resource for what is reasonable cause.

There is no federal filing, other than the 1120S.

I agree with @qbteachmt that the election to put the real property into a corporation was very likely not the wisest choice, but the client selected the attorney and paid that person to set this up. It is not our job to ...

Answers are easy. Questions are hard!

qbteachmt

Level 15

Here's why it matters who is listed as the owner on the LLC:

If the S Corp solely owns the LLC, then there is no problem with those prior filings (back to 2018), based on what is stated here. If the person as an individual is listed as the sole owner of the LLC, then the corporation reporting the assets, liabilities, income, depreciation, etc, for that property would be an error on the 1120S, as would the 1040. There would need to be amendments, then. It's only three years.

And I would check the insurance coverage, too.

Don't yell at us; we're volunteers

D

dandyboy5Author

Level 2

Thank you all for your insight.
I should have clarified that the rental property is commercial land and gets rent from the business tenant.
The land was put in the LLC by the attorney to protect the clients other assets from potential liability.
The LLC only has that one property in it.

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