Interesting situation came up recently and I thought I'd share it here.
We have a prospective client which is an LLC whose sole asset is a property in Mexico. By virtue of their ownership, each partner each receives a number of weeks they may occupy this property each year. Sort of a timeshare type arrangement.
Most partners use their allotted time personally and have no business intent or activity associated with the LLC, but some regularly rent some or all of their time each year.
They've been filing a 1065 for a number of years and got dinged with late filing penalties a few years back. They have 10-15 partners (I haven't seen the return yet).
Does an arrangement like this even warrant a 1065 filing? IMO, they don't meet the definition of a partnership: "joining together to share income/loss."
My research so far shows they don't qualify to file a §761(a) election as the LLC owns the property and not the individuals as co-owners.
I'm also inclined to suggest they dissolve the LLC, own the property jointly, and use the money they've been spending on tax filing to buy additional insurance. Risk aversion was their primary intent for the LLC to begin with.