I have a 1065 return with multiple investment properties in it. Partners are husband, wife and another LLC that is also wholly owned by husband and wife (no other partners).
One of the properties was placed into the LLC erroneously with depreciation for a couple of years. The problem is that they did not transfer title to the LLC and it will force the owners to file as a foreign entity in CA (other fees) when it's not necessary. This particular property has enough coverage under liability umbrella that attorney is not worried about it being in LLC and is not a commercial property.
My question is will this trigger capital gains if I transfer this out of the LLC and start reporting on owners Schedule E on personal return. Do I have to transfer the basis at FMV if I dispose of it on the 1065 and add to Schedule E or can I dispose of property on 1065 and enter on Schedule E at same cost basis with remaining depreciation life?
You'll need to sign in or create an account to connect with an expert.
Yes, you can transfer out of the LLC and report on the Schedule E as though it was always on the Schedule E of the individual(s). This would be treated like property transferred between related parties which retains the same character. Basically, there will be no sale just a change in the official name of the owner vs the LLC.
Thank you so much for that!!!
If the property was erroneously placed in the LLC and does not belong in the LLC (based on your facts), you need to amend the prior year tax returns; both the LLC and your personal tax returns.
You can't transfer out property that shouldn't have been in the LLC to begin with.
@Rick19744 This would ultimately have the same "net" effect on the tax returns due to the pass-through of income from the partnership to the same individuals. I understand that the LLC didn't own it but that becomes more a legal issue than a tax issue if it results in the same taxation...no?
A few additional comments:
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
taxed24
New Member
pattylovelife
Returning Member
Admac
New Member
befuddled4
Level 2
margz
Level 1
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.