our LLC sold off its rental property last year.after distributing the assests, we closed the llc. how do I list the distribution?turbotax wants purchase/sale date of my interest in LLC. our LLC accountant stated this wasnt needed for k-1, nor was regular gain/loss listing turbo tax is asking for. who is correct?
TT software is aimed to provide a step by step approach to helping individuals prepare their tax returns. In this complicated tax world they do a good job.
What you are seeing in the software is TT is wanting to eliminate this entity for next year and as part of that process they are attempting to help you determine your overall gain or loss on disposition.
You certainly don't have to follow their step by step approach. What you will need and hopefully have, is your basis in this LLC investment. This will determine your overall gain or loss.
You will need to update your basis schedule for the current year (and final year) K-1. Now adjust your basis schedule for your liquidating distribution. If you have basis remaining, then you have a capital loss to report on Schedule D and applicable form 8949. If your basis goes below zero, then you have a capital gain to report on Schedule D and applicable form 8949. This gain essentially puts your basis back to zero.