LLC land sale

[mcraiga]

My brother, sister and I owned land that we inherited.  We created an LLC in 2010 and just sold the farmland this year.  How and where do I put the information in Turbotax to reflect the cost basis.....we had an appraisal that valued the land in 2010 as compared to the sale price and there was a gain of 133000 in value.  How do I enter information so my capital gains is on only the 133000 gain rather than the whole 225000 sale price?

[Critter-3]

WE set up an LLC .. so have you been filing a form 1065 for each tax year since 2010?   Who sold the property ?  The LLC or you personally ?   Did the closing company issue one 1099-S or 2 ?  Whose name was on that/those form(s) ? 

[pishaloo]

i and my husband  purchased a land that we later on put 

in an llc and then built a single family home on and sold it.  How do i report all this on the 1065 tax return or K-1?

is it considered dispose of business property or capital asset and how do i report the contributed land?

[leeloo]

First, you will need the business program to access the Form 1065. You will total the cost of the land, building material and outside paid labor to determine the basis. The sales price is the amount you sold it for. You can also add certain closing costs paid to the basis.

[pishaloo]

Thank you for the answer.  Do I report as an Investment Sale or Sale of a business asset?  I am assuming it would be an investment Sale right?  Also,  We purchased the lot in 2010 and it was put into the LLC in 2016 do I add to the basis all the money that we spent on it to prepare for construction (plans, permits, grading etc...) from 2010 to 2016, or report that separately?  The land was purchased under me and my husband's names and later transferred into the LLC with both of us as partners.  Thank you again

[leeloo]

It depends on your intent. Normally, if you are in business, you are in it to make a profit. However, you also buy an investment for the same purpose. Was this a house you thought you might live in and then decided to sell? It would then be an investment

[pishaloo]

The LLC does not perform any business, just the land was put into it and built on and sold the house, so would that be considered an investment or business asset? Regardless of the either or it would be considered a long term capital gain right?   Thank you again

[leeloo]

If there was no business, it was a capital gain. To be long-term, it must be held a year and a day or longer.

[Critter-3]

The land was purchased under me and my husband's names and later transferred into the LLC with both of us as partners.  

What an unneeded step to take ... now the LLC must file a partnership return to report the sale of the land (long term capital gain) and issue a K-1 form to each partner to enter on their own personal return.  An extra step and cost  that was really  not needed for a married couple.  

[pishaloo]

yes i guess so.  My question is that do i report that as an investment sale or sale of a business asset in the business tax. Also the costs that were incurred prior to placement in the LLC. does that get added to the basis or it is considered contributed capital?  We owned the property for 10 years so it is long term capital gain.

thank you

[leeloo]

It's a capital gain. Add settlement costs and improvements to the basis.

[pishaloo]

Thank you, 

For Date Acquired do I input the date the property was transferred into the LLC or the date we purchased the property?

We purchased the property seven years before the LLC was formed.

[Mike9241]

since you inherited the land, the tax basis is the FMV on the date of death of the owner. it's not the date you formed an LLC. 

[pishaloo]

We did not inherit the land. We purchase it but few years before forming the LLC