I purchased stock in a LLC in 2016 and sold it in 2017. I received a K1 which included a sales schedule. I provided my sales proceeds(3)and purchase amount(4). The company provided negative values for the cumulative adjustment basis of $-2304(5) and ordinary gain of $1677(7) In their instructions, they stated to come up with Total gain/loss(6),subtract the amounts in 4 and 5 to determine the total gain and loss(6). Subtracting a negative number results in adding it to my basis and thus reducing my overall taxable gain. Is this approach correct?
A couple of questions:
1) What was your initial capital contribution and any distributions?
2) On your K-1 Part II Section L. What box is checked?
1. Initial capital through a stock purchase was $14165. Stock sold later for $17249. Under section L beginning capital was $12611. Ending $12155. Section 19 from part iii was $293.
2. Tax basis box is checked.
Hard to analyze over a forum, but something is not working based on the information provided.
A couple of follow-up questions since tax basis is checked on the K-1:
1) In Section L what is reflected on the distribution line?
2) Are you saying that only $293 is reflected on your final K-1 in box 19 code A?
3) Are you saying that Section L on your final K-1 reflects an ending balance of $12,155?
Section L
1.Beginning Capital. $12,611
Capital contributed. . 0
Current year increase (decrease). . -456
Withdrawals & distrinbutions. $12156
Ending Capital 0
Tax basis checked
2. 19 Distribution $293 code A
3. Withdrawal Distribution. $12155
Thank you for your review
Ok. We are closing in on the final answer.
Just want to confirm that aside from the above, you received separately cash in the amount of $17,249 for your interest in the LLC.
Yes. I sold my total interest in the LLC in2017. It was held less than a year
Based on your responses, I arrive at the following: