Avoiding Accidental Partnerships in Real Estate

**Correction** : Hey everyone! I misspoke in this episode. The guidance on rev proc 84-35 references the old consolidated audit procedures that impact older returns. The CPAR (Consolidated Partnership Audit Regime) that impacts current returns does NOT impact the ability to use Rev proc 84-35 for late relief.

InCite Tax Professional Community: https://www.incite.tax/

Facebook for Tax Professionals: https://www.facebook.com/groups/realestatefortaxpros

Facebook for Real Estate Investors: https://www.facebook.com/groups/REIKnowledgeVault

Electing out of CPAR: https://www.irs.gov/businesses/partnerships/elect-out-of-the-centralized-partnership-audit-regime

Small Partnership Late Filing Relief Rev Proc 84-35 : https://www.taxnotes.com/research/federal/irs-private-rulings/legal-memorandums/small-partnerships-are-not-automatically-exempt-from-filing-returns/1w8vn

Rev Proc Spousal LLC Filing as a QJV instead of a 1065: https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

In this episode of 'Real Estate is Taxing,' host Natalie breaks down the common issue of accidental partnerships in real estate, explaining how they are often unknowingly created and the complications they bring to tax filings.

She outlines the key facts about partnerships, including the forms and reports required, and provides multiple solutions for managing these accidental situations, such as treating them as disregarded entities or qualified joint ventures. Listeners also get strategic advice on dealing with late partnerships and ensuring they do not fall foul of regulations. Natalie emphasizes the importance of understanding the tax implications when setting up LLCs with co-owners, which is crucial to avoiding unexpected tax complications.

00:00 Introduction to Real Estate Taxing
00:58 Understanding Partnerships and Form 1065
04:17 Common Accidental Partnerships
05:43 Solutions for Accidental Partnerships
14:47 Late Filing Relief and CPAR
21:34 Conclusion and Real-Life Example