I have a client that owns a building to what used to be considered the rental property to the business. He no longer has the business but still owns the building. The building has been vacant for years but the LLC the owns the building is still active.
The tax payer has expenses associated with the real estate but does not want to file a tax return since it has no activity.
I ran into a situation similarly to this in the past which the tax payer did not file a tax return for the land owned by an LLC (of course these LLC's are taxed as partnerships and have filed form 1065 in the past).
The IRS agent who I spoke to after receiving a penalty for not filing a return stated that since expenses were incurred such as the required filing fee for the entity by the State, it was mandatory to file a return and refused to waive the penalty. Since then, I have file a tax return for all entities that have a federal tax ID number to stay on the safe side.
What do I do in this situation? The tax payer does not seem to have the building for rent and would potentially sell it the first chance he gets. It is considered an investment property now but as far as filing requirements, I'm a tad confused regarding the partnership..