Business & farm

I will make some assumptions and then provide some guidance:

• I assume that you maintained a basis schedule of your tax basis in your LLC investment
• I assume that you determined your overall gain or loss after adjusting your tax basis schedule for your final 2018 K-1.
• I assume that you reported this overall gain or loss on your 2018 personal tax return; form 8949 and Sch D
• If the above 3 assumptions are accurate, then what happens here is you will now claim a capital loss for the $$ that you specifically paid.  At this point, if reported correctly in 2018, you have no tax basis.  So essentially what happens is you now have tax basis equal to the amount of $$ that you personally paid; there is a deemed capital contribution for the $$ that you paid Philly. This will be reported on your 2019 tax return; form 8949 and Sch D.  The sales price will be zero and your cost basis will equal the $$ you personally paid (updated tax basis figure).  This will be deemed long-term assuming that you held your LLC interest for over a year.
• This assumes that the Philly tax you paid was either the Net Profits Tax (NPT) or the Business Income and Receipt Tax (BIRT) or a combination of the two.