This issue (liquidation of a multi-member LLC) is WAY more complicated and none of the responses have addressed your question:
- There are a number of questions that need to be addressed. You have not mentioned whether the LLC tax return is being prepared by a tax professional.
- Hopefully it is, as you will need to obtain detailed information from this individual
- We don't know what assets are involved as you only mention that you will receive two properties
- What is the spouse receiving in this winding down event?
- Hopefully you have maintained your outside tax basis, as this is key.
- Is there debt on the books and how is that being handled?
- In general, when there is a liquidating distribution of property from a partnership (LLC taxed as a partnership), the property takes a "substituted" basis. This is where your outside tax basis comes into play and is important.
- There are tax regulations that come into play in determining how to allocate your outside tax basis to the properties received in the liquidating distributions.
- These rules also impact depreciation going forward.
- When property is distributed out, the member steps into the shoes of any depreciation recapture in the future.
As you can see, this gets complicated very quickly and I recommend you consult with a tax professional to help you work through these issues.
*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.
