LLC Member Units Sold in 2019
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Returning Member

LLC Member Units Sold in 2019

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?

 

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Level 4
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Returning Member

LLC Member Units Sold in 2019

Link is not working

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Level 6

LLC Member Units Sold in 2019

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. 

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Level 10

LLC Member Units Sold in 2019

Several issues here:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
*A reminder that posts in a forum such as this do not constitute tax advice.*
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Returning Member

LLC Member Units Sold in 2019

Thank you and duly noted on the need to potentially seek third party professional advice.

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