Thanks to you both. It does seem rather straightforward,
which is why I had some question about it! As it turns out,
the bank holding the mortgage will not allow a transfer into
an LLC, single member or not. So they are looking at
increasing their umbrella liability coverage to provide at
least a bit more protection until they pay off the mortgage
and get out from under the bank.

Thanks again.

Robert

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"Robert" <robertcalford[at]yahoo.com> wrote:

- quote -

Seems standard enough to me - SMLLCs are disregarded
entities for tax purposes so the reporting would be
virtually identical. How do you think it should be handled?

BTW - doing this will raise a question or two:
1 - which spouse will be the single member of the LLC?
2 - what happens in the event of a divorce, specifically,
what happens to the SMLLC property? Will the "other"
spouse lose out?
3 - of more concern - what happens if the "other" spouse
gets the property in a court ordered settlement? Will
there be phantom income as a result of the transfer?

I'd try to find out what they are trying to accomplish
before I'd recommend that they place a joint asset into a
SMLLC. It may be better for them all around if they use a
multi-member LLC. Lots of good stuff happens here, like
reduced audit risk and ease of moving the asset in and out
if necessary.

Good luck,
Gene E. Utterback, EA, RFC

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Robert wrote:

- quote -

Sure. The SMLLC is a disregarded entity for tax purposes,
which means you just pretend the taxpayer owns it outright.

Phoebe

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I have an issue that I would appreciate other professional
opinions on. If a taxpayer is the sole member of a single
member LLC and the LLC owns a vacation home, can the taxpayer
still deduct the mortgage interest and real estate taxes for
the personal days of use? This is a property that is
currently owned by the taxpayers as a couple. They rent the
property and they use it for more than 14 days and more than
10% of the rental days of the year. Thus for the past couple
of years they have reported the rental income and expenses on
Schedule E and the personal deductible expenses on Schedule A.

An attorney has advised them that they can deed this property
to a single member LLC and still continue to report on Schedule
A and E as they always have.

Has anyone seen this situation before? Does anyone have an
opinion one way or the other?

Thanks.

Robert Alford, CPA

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >