Sale of an asset in which the LLC carrys the loan

[atmeyerjr]

In 2019 my LLC bought back the land , building and assets of a business for $1. I sold the land and building last year and leased the assets to the buyer of the land and building for 13 months. In August 2020 I sold the assets and my LLC is carrying the note. I financed the sale of the assets at 4% for 25 years how do I record this?

[M-MTax]

Sounds like an installment sale.....form 6252.....but why TTX business? Is your LLC a single member LLC with no corporate election? You should be reporting this on your personal tax return.....1040. 

[atmeyerjr]

Thanks for the reply. The LLC is a multimember LLC. I believe it will end up on my 1040. I realized I need to set it up as a note receivable in Quick books then I can record the payments against the note and interest income.

[Rick19744]

I think you need to clarify this transaction and expand on the facts.

• You indicate that the LLC is a multi-member LLC in your response
• The facts indicate that the LLC (multi-member LLC) bought land, buildings, etc for $1.
  • Who was the seller in this transaction?  A related party?
  • This doesn't sound like an arms length transaction?
• You then state, that "I" sold the land and leased the assets to the buyer?
  • This doesn't make sense as you stated the buyer was the LLC who now owns the property?
  • Who is "I" in your facts?
• I think too many details are lacking to provide an accurate response as to the tax implications.

[Critter-3]

This is the Turbotax forum ... for help with Quickbooks :  https://quickbooks.intuit.com/learn-support/us-quickbooks-community/misc/03/community-us

[atmeyerjr]

Hi Rick,

The company sold was  a C corp let’s call it Company A. The buyer was a foreign company. They bought the stock from my brother and I. The stock did not include the land or building so we set up an LLC to hold the land and building which we leased to Company A and it’s new owner. After several years the new owners had run Company A into the ground and it was loosing $$$ everyday so they asked us if we wanted it back. They offered to sell it to us for 1$. So we (The LLC) bought the “assets” for 1$. At this point the LLC  owns the land and building and the assets.

After turning things around a new buyer wanted to purchase the land, building and assets. Since we owned the land and building (which had a basis) for over 20 years we sold the land and building. But we leased the assets to the new buyer for 16 months so we would pay capital gains instead of normal income taxes.

This was done with two installment sales. One for the land and building (2018) and one for the assets (2020).

I hope this helps clear things up.

I’m new to Turbo tax so I wasn’t sure how to set this up. I’ve since created two “other assets” accounts in quick books for the LLC, one for the land and building note and one for the assets note. The income from the two sales appears to flow through Turbo tax generating K-1’s to the owners of the LLC.