Thanks for the responses:
- Good to know that you have maintained your tax basis.
- Now that you have your K-1, you need to update your tax basis for the current year activity up through the date of sale; so you would adjust your tax basis schedule for 3/12 of the current year activity.
- Then determine the basis for the percentage of shares you sold
- Once bullet #2 is complete, then you will determine your gain or loss on the sale of your shares; selling price minus the tax basis for the shares sold.
- One item we haven't discussed is who the shares were sold to.
- If the shares were sold to a related party (as defined in IRC 267) any loss on the sale would be disallowed.
- In this event, any gain on a sale by this related party in a future sale (to a non related party), would then be adjusted downward by the previous disallowed loss.
- A gain on a sale to a related party is not impacted.
- Once you have adjusted your basis for the portion sold, then make sure you adjust it for the remaining 9/12 of the applicable K-1 line items.
- If your sale was not to a related party, and you in fact sold at a loss, then the loss is reported on form 8949 and Schedule D just as any other investment. Enter the information in the same manner as you would if you received a brokerage statement (even though you in fact did not).
- At this point you should be good to go.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
