ok they say basis is beginning capital less withdrawals and distributions this should be the amount in box 19 - box 19 is not supposed to include money paid to you to buy out your interest.
if tax basis is checked in box L, add (subtract) amount in box L labeled current year increase (decrease) - this is supposed to be the net amount of current year income, deductions and credits reflected in boxes 1 thru 20. the following boxes are not items of income, expense or credits 6b, 14, 16 other then amounts labeled credits , 19, and maybe certain items in box 20 - sadly there can be numerous items in box 20 - some affect basis some don't
you have selling price - what they paid for your interest. You are correct as to what selling expenses are - $0.
above gives how you compute basis.
if this is a LLC that reports income (loss) in box 1 then (extremely unlikely the following would apply if income/(loss) are on lines 2 or 3)
ordinary gain - if there is any, this number would have to be supplied to you by the partnership. usually this arises when the partnership uses the cash basis for income tax reporting and has unrealized (uncollected) receivables and inventory (unsold or expensed) . these are referred to as hot assets covered by IRC section 751 and the related regs as follows:
In the case of a sale or exchange, Regs. Sec. 1.751-1(a)(1) provides that
To the extent that money or property received by a partner in exchange for all or part of his partnership interest is attributable to his share of the value of partnership unrealized receivables or . . . inventory items, the money or fair market value of the property received shall be considered as an amount realized from the sale or exchange of property other than a capital asset. The remainder of the total amount realized on the sale or exchange of the partnership interest is realized from the sale or exchange of a capital asset under section 741.
In the case of a redemption, Regs. Sec. 1.751-1(b)(1) provides that
Certain distributions to which section 751(b) applies are treated in part as sales or exchanges of property between the partnership and the distributee partner, and not as distributions to which sections 731 through 736 apply. . . . Section 751(b) applies whether or not the distribution is in liquidation of the distributee partner’s entire interest in the partnership. However, section 751(b) applies only to the extent that a partner either receives section 751 property in exchange for his relinquishing any part of his interest in other property, or receives other property in exchange for his relinquishing any part of his interest in section 751 property.
As noted above, there are two categories of hot assets that trigger ordinary income upon the disposition of a partner’s interest: unrealized receivables and inventory items. Sec. 751(c) provides the definition of unrealized receivables, while Sec. 751(d) defines inventory items.
if there is any, most of the time it would be info provided in box 20 or a supplemental schedule. if you see nothing your options are either to assume it's $0 or ask.
