Who Reports The Income/expense?
How does the tax reporting work if a property is still held in a individual's name but it's operated by a partnership.
What I mean is when a few people get together to form a partnership but when the property is purchased, it is put into one person's name for one reason or another (like for ease in financing).
So... does the individual whose name it is in *have* to put the income, expenses on their own sched E or can it be accounted for through the partnership's 1065 (and related 8825)?
I guess what I'm asking is....Does the titling of an asset determine who reports the income/expense and what IRS forms (individual, partnership, corp. etc.) are used?
Thanks.
...bump...
While you should consult appropriate counsel I will give you my thoughts on your situation.
IF the property is titled only in you name then you are the only one who is entitled to deducitons.
One way around the partnship could be in the property was titiled tenants in common(TIC). With TIC you each own a share of the property, so you can each report your proportionate share of the income and expenses.
-Adam
You should deed the property to the partnership and the partnership is entitled to income and expense deductions (including mortgage interest). On a side note you should be aware that you are likely still liable for the mortgage should the partnership default on the loan so I would consider this in detail. It is also possible (although highly unlikely) that the lender will call the note due because it was transfered out of your name (you effectively did a sub2 to your partnership).
GOOD LUCK
Thanks.
Yes, the plan is to go ahead and QC deed the properties to the partnership. But, I was just wondering if there are any options as it stands right now. ....i.e. the property in the individual's name.
Also, I think it'd be best to transfer the properties right at the end of a tax year so there's not the situation where in one tax year some of the income and expenses need to be reported by the partnership and some reported by the individual.