Open TurboTax

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
Your taxes, your way. Get expert help or do it yourself. >> Get started
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

cancel
Showing results for 
Search instead for 
Did you mean: 
Redheather
Level 2

In simple terms (please ;) how is the capital account used in sale of a partnership?

I am selling an LLC, and have the capital account on the 1065s running pretty low....how does this affect the sale?

1 Best answer

Accepted Solutions
MichaelL1
Level 15

In simple terms (please ;) how is the capital account used in sale of a partnership?

The capital starts with the money you put and is reduced by money taken out and losses claimed.

So when you sell your interest if the capital account (or your basis/cost) in the partnership is small, you will have a larger gain to report than if you had a large capital account.

Two things matter, what you sell if for and the remaining basis/cost of what you sold. 

View solution in original post

2 Replies
MichaelL1
Level 15

In simple terms (please ;) how is the capital account used in sale of a partnership?

The capital starts with the money you put and is reduced by money taken out and losses claimed.

So when you sell your interest if the capital account (or your basis/cost) in the partnership is small, you will have a larger gain to report than if you had a large capital account.

Two things matter, what you sell if for and the remaining basis/cost of what you sold. 

Redheather
Level 2

In simple terms (please ;) how is the capital account used in sale of a partnership?

thanks!  Trying to reconstruct what other preparer did...kept the capital acct the same each year by adding and subtracting expenses for the year, so cap account stayed the same forever...doesn't make sense..others I have subtract expenses and capital account goes down each year.

About Community

Learn about taxes, budgeting, saving, borrowing, reducing debt, investing, and planning for retirement.

3.49m
Members

2.62m
Discussions

Manage cookies
v