trust owned llc vs partnership llc filing

mosparks
mosparks Member Posts: 2 Newcomer
in Situation & Life Changes

Would transferring our LLC interest (married 50/50 member managers, non community property state, currently required to file partnership 1065) to a revocable living trust, allow us to elect and file as a Disregarded Entity single member llc moving forward? Would this trust owned llc require filing 1041 or allow us to use 1040 schedules moving forward?

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  • AleceN
    AleceN FreeTaxUSA Agent Posts: 19
    Answer ✓

    If you and your spouse are the only partners, you can transfer your LLC interest to a Single-Member LLC. (https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies)

    When filing a Revocable Trust, the tax liability falls on the grantor or creator of the trust. Therefore, you would file the trust income on your personal taxes with a 1040. However, irrevocable trusts need to be filed with a 1041. (https://www.irs.gov/instructions/i1041#en_US_2023_publink1000285939)

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