Some thoughts:
- We really have limited facts, but my interpretation of the facts, is it appears to have been a multi-member LLC taxed as a partnership.
- What wasn't discussed is whether one of the other members left or if @emy was just added; so the LLC ownership increased by one member
- Bullet two would be good to understand as there are numerous potential tax implications:
- built-in gains
- Section 704(c) issues
- these issues depend on what type of assets the LLC holds
- Also, what method of accounting is the LLC
- @emy has received a "profits interest" in the LLC
- While there are still unknown facts, most of which are beyond the scope of dealing with in a forum such as this, if @emy was added and no change in any other member, then I would not check the box on line J of the Schedule K-1. If you do, then the IRS will be looking for a form 8308 which is applicable in most scenarios.
*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.
