I sold my 25% member interests in an S Corp LLC to my two partners after 8 months of ownership. I received a K-1 but did not receive a 1099-B for the income. How do I report this income from the sale on my personal return?
If the S-corp was not publicly traded then a 1099-B would not be issued ... I highly recommend you seek out local professional assistance with this unusual and possibly tricky subject.
Several issues here:
- The link mentioned is maybe partially helpful for your situation. This is because the LLC in these facts is treated as a S corporation for tax purposes. In the link provided, the LLC was taxed as a partnership.
- You need to determine your tax basis in your S corporation interest. This begins with your capital contribution and is adjusted by the applicable lines on your K-1. In your case this should be a fairly simple computation due to the short time frame. Just make sure you adjust your basis only for the applicable lines on your K-1.
- At this point you subtract your tax basis from the proceeds received. If you still have tax basis remaining after this subtraction, then you will have a short term capital loss. This will get reported on form 8949 and Schedule D. If the computation causes a "negative figure", then you will have a short-term capital gain equal to the amount of the negative amount. This will be reported on the same forms as noted earlier.
- As has been noted in other posts, it may be a good idea to meet with a tax professional to make sure your overall gain or loss is determined correctly.