I have a K-1 for an LLC where the property had been chronically underperforming for years. I was told prior to disposition that "the lender indicated that they would be pursuing foreclosure and placing the property into receivership. Since then, they have put a receiver in place and listed the asset for sale." The property has since been sold, with the sponsor reporting that "the foreclosure sale of the property has occurred. The property was sold for $4.56M, well below the loan amount of $6.3M, leaving no equity to be recaptured." The K-1 is marked final. There are figures included in boxes 9a and 10. In connection with disposition of partnership interest, TurboTax is indicating that I need to provide information regarding property disposition, specifically the sales price and basis. The sales price is obvious, other than if I put in the entire amount or my ratable share. Is the basis figure the outstanding loan amount? If not, then what do I use? Anything less than the sales amount will trigger tax liability. Or maybe I made an input error generating this request for information?
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A number of comments:
Please check back later. I will page Champ @Rick19744.
A number of comments:
Understood and thank you for the detailed explanation. By way of additional information, my tax basis is zero. For the sake of argument, my share of profits is 1%. So if the sales price is 4.6mn, my ratable share of the sales price would be 46k and my basis would be zero. When inputting those figures, TT is generating a substantial further refund. I do have loss carryforwards that can absorb the gain, but I would have thought that would simply leave me in the same position before and after including the sales proceeds. I appreciate that this may have something to do with netting this gain against release of passive losses. Can you think of any other obvious reasons?
Wondering if you might have some further insights based on the additional information I shared. If so, most welcome. Thanks.
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