We are operating on a cash accounting system.
We have always distributed all of the profits and have made no capital contributions to the LLC.
Since I will have $45K in ordinary income from the recovered depreciation am I correct that the initial $12K purchase payment that first year will not be counted as capital gains since I am already taking the $45K as ordinary income.
Will I continue to not have capital gains each year until the payments exceed the $45K I will be taking as ordinary income?
Thanks again for all your time.
