With regard to California, I guess question is whether the liability protection you get from an LLC is worth that $800 (that's the minimum) LLC franchise tax you pay. I don't know the specifics of your situation. I would guess that in many small property situations, the $800 isn't worth it... that what makes more sense is loading up with insurance. But this seems like a question for a local attorney.
With regard to the partnership accounting rules, you can allocate the income and deductions in basically any way that makes economic sense... but the one way you can't allocate is based on the partners' taxes. I.e., your allocations can't artificially move stuff around for a tax benefit.