Based on the additional limited facts:
- You didn't respond to the method of accounting question as this could have some impact.
- I would also be surprised if your tax basis is exactly zero, but it is possible if all profits were distributed. Have you been maintaining your tax basis? This figure is key as it impacts your overall gain on the sale of your interest.
- Since there are two original partners, your share of Section 751 for the assets will be $45,000 (half of the $90,000 in depreciation taken).
- You need to look at the form 6252 and I would recommend manually completing one to make sure TT arrives at the same end result.
- When completing the form 6252, you will note line 9 is where your share of depreciation will be entered.
- As a result of the additional facts, you will recognize $45,000 in ordinary income in the year of sale.
- You will then have $60,000 in capital gain spread over the installment period including some in the initial year. This will be based on the computation in Part II of the form 6252.
- As you can see, "a very simple LLC" does not equate to a simple tax result when dealing with partnerships.
*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.
