Hello, I have a 2 person Rental Real Estate LLC where everything is 50/50. 2020 is the final year. The rental house is going to be distributed to the members equally and not sold. How do I enter that in Turbot tax. If I indicate it is the final year, then the system wants a disposition date entered. If I enter a disposition date, then the system is looking for proceeds and appears to be creating a 4797 form which does not appear correct. How should this be entered for the final return? Thanks
You have a liquidating distribution of the LLC which you will show on the return....return marked as final....as property distributed to each member....presumed to be 50/50. This is not a sale to the members like it would be if you had a corporation. You should read through the entire article at this link for more info: https://www.thetaxadviser.com/issues/2016/jun/liquidation-of-llc.html
Thank you for the reply and link to the article.
My issue seems to be with how to get Turbo Tax to not want to force a disposition which then creates the completion of the form 4797. I tried to force the 4797 to be $0 by inputting proceeds equal to the remaining basis, but then those proceeds are listed within the state return as gross proceeds. Is there a guide for how to complete the process within TT?
Maybe call customer service for entry steps. You're distributing property and ending the partnership so you need to file a final return and the depreciation will end at the date you specify. There should be no other form like a 4797.